You are on page 1of 417

Towards an Inclusive Democracy

Towards an
Inclusive Democracy
The crisis of the growth economy and the need for
a new liberatory project

Takis Fotopoulos

Cassell
London and New York
Cassell
Wellington House
125 Strand
London WC2R OBB

127 West 24th Street


New York, NY 10011
©Takis Fotopoulos 1997
All rights reserved. No part of this publication may be reproduced or transmitted in any
form or by any means, electronic or mechanical including photocopying, recording or
any information storage or retrieval system, without prior permission in writing from the
publishers.

First published 1997


British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Fotopoulos, Takis.
Towards an inclusive democracy : the crisis of the growth economy
and the need for a new liberatory project / Takis Fotopoulos,
p. cm.
Includes bibliographical references and index.
ISBN 0-304-33627-0 (hardback). — ISBN 0-304-33628-9 (pbk.)
1. Democracy. 2. Capitalism. 3. Socialism. 4. Rationalism.
I. Title.
JC458.P48 1996
321.8—dc20 96-35201
CIP
ISBN 0 304 33627 0 (hardback)
0 304 33628 9 (paperback)
Typeset by York House Typographic Ltd, London
Printed and bound by Biddies Ltd, Guildford and King's Lynn
Contents

Acknowledgements vii

Introduction ix

Part I The Crisis of the Growth Economy

1 The Market Economy and the Marketization Process 3


From markets to market economies 4
The marketization process: the liberal phase 14
The marketization process: the statist phase 21
The marketization process: the neoliberal phase 33
Internationalization and the nation-state 46
2 The Growth Economy and 'Socialist' Statism 62
The rise of the g r o w t h e c o n o m y 63
The fall of the 'socialist' g r o w t h e c o n o m y in the East 73
The collapse of social democracy in the West 85
W h y ' s o c i a l i s t ' s t a t i s m failed 100
3 The Growth Economy and the South 110
The failure of the g r o w t h e c o n o m y in the South 111
The conventional approaches to d e v e l o p m e n t 117
The ecological d i m e n s i o n of d e v e l o p m e n t 129
Democracy and d e v e l o p m e n t 131
4 The Generalized Crisis of the Capitalist Growth Economy 140
A m u l t i d i m e n s i o n a l crisis 141
The g r o w t h e c o n o m y and the ecological crisis 149
Is there a w a y out? 157

Part II Towards a Confederal Inclusive Democracy

5 Towards a New Conception of Democracy 171


Democracy and the g r o w t h e c o n o m y 171
Democracy, freedom and a u t o n o m y 175
Conceptions of democracy 185
The conception of an inclusive democracy 206
6 A Confederal Inclusive Democracy 224
Democracy and c o m m u n i t y 225
The preconditions of economic democracy 237
Outline of a m o d e l of economic democracy 255
7 From 'Here' to 'There' 275
A new kind of politics 276
The transition to economic democracy 289
CONTENTS

Part III Towards a Democratic Rationalism


8 How Do We Justify the Project for an Inclusive Democracy? 305
The m y t h of objectivity: o r t h o d o x 'objectivity' 306
The m y t h of objectivity: dialectical 'objectivity' 316
Beyond ' o b j e c t i v i s m ' , irrationalism and relativism 340

Epilogue 357
Select Bibliography 360
Name Index 375
Subject Index 378
Acknowledgements

I would like first to thank my colleagues on the editorial board of


Democracy and Nature (formerly Society and Nature) in which some of the
material in this book was first published. The constant theoretical discus-
sions which I have been engaged in for the past four years with the editors
of the English and Greek language editions of the journal, T. Papado-
poulos, N. Raptis and P. Stavropoulos, were immensely stimulating and
helped me in clarifying several important issues. Similarly, the perceptive
comments of Murray Bookchin and Cornelius Castoriadis were of parti-
cular significance in the development of some of the ideas in this book. I
should also like to thank Stephen Millett whose comments on the model
of economic democracy were especially useful.
I am particularly grateful to Rjki Matthews for her advice and scrupu-
lous reading and copyediting of this book, as well as to Charlotte Ridings,
Cassell's house editor and Alan Foster, Cassell's copyeditor, for their
professional work. I would also like to express my gratitude to my editors
Steve Cook and Jane Greenwood of Cassell for encouraging the publica-
tion of this book and for general advice throughout the preparation of the
manuscript respectively. Last but not least there is my companion Sia and
my son Costas, who have helped me with their valuable advice and
support throughout the preparation of this book.
For the rest, the views I express in the following pages are entirely my
own, and I therefore bear sole responsibility for any defects the book may
contain.

T.F.
June 1996

vii
For Sia and Costas
Introduction

The collapse of 'actually existing socialism' does not reflect the 'triumph
of capitalism', as celebrated by its ideologues. Nor, of course, does it
provide justification for a social system which, in its present universality,
condemns to misery and insecurity the vast majority of the world popula-
tion and threatens the planet with an ecological catastrophe. Furthermore,
it does not herald the historical victory of Western 'socialist' statism over
Eastern 'socialist' statism, as social democrats have hastened to declare.
Social democracy, in the form that dominated the quarter of a century after
World War II (state commitment to welfare state, full employment and the
redistribution of income and wealth in favour of the weaker social groups),
is dead and has been replaced by the present neoliberal consensus ('safety
nets', flexible labour markets and the redistribution of income and wealth
in favour of the privileged social groups). Therefore, what the dismantling
of 'actually existing socialism' and the parallel collapse of social democracy
have shown is the final disintegration of socialist statism, that is, the
historical tradition that aimed at the conquest of state power, by legal or
revolutionary means, as the necessary condition to bring about radical
social transformation.
However, even before the actual dismantling of socialist statism (for
reasons related to its own contradictions as well as to structural changes in
the system of the 'market economy' that we shall pursue in the first part of
this book), it was obvious that there was a fundamental incompatibility
between the state socialist project and the demand for creating conditions
of equal sharing of political, economic and social power among all citizens.
State ownership and control of economic resources, even when it led to
security of employment and to significant improvements in the distribu-
tion of income and wealth, proved utterly inadequate for creating eco-
nomic democracy, namely the equal sharing of economic power, not to
mention conditions for the equal sharing of political power. Furthermore,
socialist statism did not make any significant progress in creating condi-
tions of democracy in the social realm generally, that is to say the
household, the workplace, the educational institutions and so on.
On the threshold of a new millennium, the development of a new
liberatory project, which would represent both the synthesis, as well as the
ix
TOWARDS AN INCLUSIVE DEMOCRACY

transcendence, of the major social movements for change in this century,


is imperative. Therefore, the meaning of democracy today can only be
derived from a synthesis of the two major historical traditions, namely, the
democratic and the socialist with the radical green, feminist and libertarian
traditions. The former define the political and economic content of
democracy ('direct democracy' and 'economic democracy'), and the latter
define its ecological and social content ('ecological democracy' and 'social
realm democracy', i.e. democracy in the workplace, the household, etc.).
So, the new liberatory project cannot be but a project for an inclusive
democracy that would extend the public realm, beyond the traditional
political domain, to the economic and broader social domains.
It is therefore obvious that an inclusive democracy implies the abolition
of the unequal distribution of political and economic power and the
related commodity and property relations, as well as the hierarchical
structures in the household, the workplace, the education place and the
broader social realm. In other words, it implies the elimination of domina-
tion relations at the societal level, as well as the implied notion of
dominating the natural world. It is equally clear that an inclusive democ-
racy has nothing to do with what passes as 'democracy' today, that is the
liberal oligarchies based on the system of the market economy and liberal
'democracy'. Furthermore, the inclusive democracy proposed in this book
has very little to do with the various versions of 'radical' democracy
promoted today by the 'civil societarian' Left. As I have tried to show in
the book, the civil societarian approach is both a-historical and utopian in
the negative sense of the word. It is a-historical because it ignores the
structural changes which have led to the internationalized market econ-
omy and the consequent impotence of autonomous (from the state)
institutions and associations (unions, local economies, civic movements,
etc.). It is utopian because, within the present institutional framework of
the internationalized market economy and liberal 'democracy', which
civil societarians take for granted, the enhancement of autonomous in-
stitutions is only possible to the extent that it does not contravene the logic
and dynamic of the market economy.
But, if a 'radical' democracy, under today's conditions of concentrated
political and economic power, is utopian in the negative sense of the word,
an inclusive democracy is definitely more than just a utopia, in the sense of
an ideal society. A liberatory project is not a utopia if it is based on today's
reality and at the same time expresses the discontent of significant social
sectors and their explicit or implicit contesting of existing society. As the
book attempts to show, the roots of the present multidimensional crisis
(ecological, economic, political, social, cultural) lie in the non-democratic
organization of society at all levels, in the sense that it is the concentration

x
INTRODUCTION

of power in the hands of various elites that marks the foundation of every
aspect of the crisis.
Thus, it is the concentration of economic power, as a result of commod-
ity relations and the grow-or-die dynamic of the market economy, which
has led to the present economic crisis. This crisis is expressed, mainly, by
the continuous expansion of inequality, the relentlessly growing gap, not
only between the North and the South, but also between the economic
elites and the rest of society within the North and the South. It is also the
concentration of economic power in the hands of economic elites which
fuels the social and cultural crisis, as expressed by the parallel spread of the
dialectic of violence, both personal and collective, drug abuse, general
social irresponsibility, as well as cultural homogeneity.
Furthermore, it is the concentration of political power in the hands of
professional politicians and various 'experts' that has transformed politics
into statecraft and resulted in a crisis of traditional politics, as expressed by
the growing reluctance of citizens to participate in it as members of
political parties, as voters, and so on.
Finally, the fact that the main form of power within the framework of
the growth economy is economic, and that the concentration of economic
power involves the ruling elites in a constant struggle to dominate people
and Nature, could go a long way towards explaining the present ecological
crisis. In other words, to understand the ecological crisis we should not
refer simply to the prevailing system of values and the resulting technolo-
gies, nor just to production relations, but to the relations of domination
that characterize a hierarchical society which is based on the system of
market economy, and the implied idea of dominating the natural world. It
is no accident that the destruction of the environment during the lifetime
of the growth economy, in both its market economy and state socialist
versions, goes far beyond the cumulative damage that previous societies
have inflicted on the environment.
Therefore, the project for an inclusive democracy does not only express
the highest human ideal of freedom in the sense of individual and
collective autonomy, but it is also perhaps the only way out of the present
multidimensional crisis.
In the first part of the book, the emergence of the system of the market
economy and the nation-state in the last few centuries is discussed and the
process that led from the liberal phase of the market economy to
the present neoliberal internationalized phase is examined. It is shown
that the present neoliberal consensus is not a conjunctural phenomenon
but the completion of a process which started almost two centuries ago
when the marketization of the economy was initiated, that is, the historical
process that has transformed the socially controlled economies of the past

xi
TOWARDS AN INCLUSIVE DEMOCRACY

into the market economy of the present. In this context, statism — the
period of active state control of the economy and extensive interference
with the self-regulating mechanism of the market aimed at directly
determining the level of economic activity — was a historically brief
interlude in the process of marketization which ended in the 1970s when
statism became incompatible with the growing internationalization of the
market economy (Chapter 1).
Next, an attempt is made to show that the rise in this century of the
growth economy, that is, the system of economic organization which is
geared, either 'objectively' or deliberately, towards maximizing economic
growth, had, in both its capitalist and 'socialist' versions, different causes
but a common effect. Thus, the rise of the capitalist growth economy was,
mainly, a by-product of the dynamics of the market economy, whereas the
emergence of its 'socialist' version was primarily related to the growth
ideology and the post-Enlightenment partial identification of Progress
with the development of productive forces. In both types of the growth
economy the outcome was the same: a huge concentration of economic
power within the old First and Second Worlds (Chapter 2) and between
the North, in which the market/growth economy originated, and the
South, which imported a bad copy of the same (Chapter 3).
The first part of the book concludes with a summarization of the
findings of the first three chapters in an attempt to show that the main
dimensions of the present multidimensional crisis (economic, ecological,
political, social and ideological) not only are interconnected but that
they may, also, be attributed in the last instance to the concentration of
economic, political and social power that the institutional framework of
the market economy and liberal 'democracy' implies. Finally, the Right's
and the Left's proposals to deal with the crisis are assessed (Chapter 4).
The second part of the book develops a new conception of an inclusive
democracy and compares and contrasts it with the historical conceptions of
democracy (classical, liberal, Marxist) as well as with the various versions of
'radical' democracy currently in fashion (Chapter 5). This is followed by an
outline of a model for a confederal inclusive democracy in general and for
economic democracy in particular, which shows that it is feasible to design
a system that transcends the inefficiency of both the market economy and
central planning in covering human needs (Chapter 6). This part of the
book concludes with a discussion of a transitional political and economic
strategy towards an inclusive democracy (Chapter 7).
Finally, the last part of the book examines the moral and philosophical
foundations of a democratic society and criticizes the attempts to ground
the liberatory project on a 'science' of the economy and society, or on an
'objective' ethics. This leads to the conclusion that the project for an
xii
INTRODUCTION

inclusive democracy can only be founded on a democratic rationalism that


transcends 'objectivism' as well as general relativism and irrationalism
(Chapter 8).

xiii
PART I

The Crisis of the Growth


Economy
CHAPTER 1

The Market Economy and the


Marketization Process

Today, after the collapse of 'actually existing socialism', a very high degree
of homogeneity characterizes the economic and political institutions of
society. Thus, the system of the market economy and the consequent
growth economy (defined as the system of economic organization which
is geared, either 'objectively' or deliberately, towards maximizing eco-
nomic growth) are universal. Also, the nation-state, usually accompanied
by some form of liberal 'democracy', is still omnipresent, despite the fact
that the present state's economic sovereignty withers away almost propor-
tionately to the internationalization of the market economy. While both
the market economy and the present form of statist 'democracy' are taken
for granted, this has not always been the case. Both the nation-state and
parliamentary democracy are historically recent phenomena. Also, al-
though markets have existed for a very long time, the system of the market
economy was established only two centuries ago.
The aim of this chapter is to show that economic growth and market-
ization (i.e. the historical process that has transformed the socially con-
trolled economies of the past into the market economy of the present) are
the fundamental pillars of the present system. The former is implied by the
grow-or-die dynamic that characterizes market competition, whereas the
latter is implicit in the pursuit of economic efficiency. A historical
examination of the economic role of the state shows a clear connection
between changes in its role and the main phases of the marketization
process. First, the state played a crucial role in the establishment of the
market economy two centuries ago and, also, during the first attempt to set
up a liberal internationalized economy in the last century. The rise in this
century of what I call statism — the period of active state control of the
economy and extensive interference with the self-regulating mechanism
of the market aimed at directly determining the level of economic activity
- was a historically brief interlude to the process of marketization. The
statist phase of this process lasted for only about half a century and was

3
TOWARDS AN INCLUSIVE DEMOCRACY

followed by the present rolling back of state control over the economy,
within the framework of the neoliberal consensus. This clearly shows that
once a market economy is established, its own dynamic tends to under-
mine any serious effort to create self-protective mechanisms for society
against the hegemony of the market and transforms society itself into a
market society.
In the last section to this chapter (see p. 46) the present debate about the
'globalization' of the market economy and the end of the nation-state is
considered. Although in the last quarter of this century the right conditions
for the completion of an internationalized market economy have been
created (after the collapse of the first attempt in the first phase of
marketization), this does not mean the complete phasing out of the nation-
state, or the nationally based multinational corporation, as 'globalists'
argue. However, the present successful internationalization of the econ-
omy does represent a higher stage in the marketization process; a stage
which involves the effectual disappearance of the economic sovereignty of
the nation-state. Therefore, contrary to modern social-democratic think-
ing, it is not just the effective social control of the national economy which
is ruled out by the internationalization of the market economy. Equally
impossible is any effective social control of the regional, continental or
even planetary market economy.

From markets to market economies


A word of explanation is needed at the outset about the use of the term
'market economy', instead of the usual Marxist concept of 'the capitalist
mode of production', which emphasizes production relations, or alter-
natively 'the capitalist world economy', which focuses on exchange
1

relations. The choice does not emanate from a need to comply with
today's 'political correctness' which has exorcised the words 'capitalism'
and - more conveniently - 'socialism'. It is a choice which is implied by
my belief that although the concepts 'capitalist mode of production' and
'capitalist world economy' have provided important insights in the analysis
of social classes and the world division of labour respectively, they are too
narrow and outdated.
They are too narrow because they imply that power relations in general
can be analysed in terms of (or be reduced to) economic power relations.
It is a central premise of this book that economic power is only one form
of power and if used as the central category in the analysis of social
phenomena related to hierarchical relations (in the household, work, etc.),
or issues of racial and cultural 'identity', it is bound to lead to inadequate or
oversimplified interpretations.
They are outdated because in today's internationalized market econ-
4
T H E M A R K E T ECONOMY

omy. neither the class analysis implied by Marxist theory nor the concept
of the world division of labour implied by the 'world-system' approach are
particularly relevant. While these important topics are touched on in this
book (see p. 36 regarding the new class structure that is emerging in the
internationalized market economy, and Chapter 3, p. 131 about the new
'North-South' divide), to my mind, it is obvious that the present multi-
dimensional crisis cannot be fruitfully discussed within the theoretical
framework implied by the above concepts.
Of course, this does not mean that the central category used in this
book, 'the market economy', is per se broad enough to interpret adequately
social phenomena like the ones mentioned above. Still, the very fact that
this category is used to explain only one part of reality, the economic
realm, without claiming that this realm determines (not even 'in the last
instance') the other realms does allow enough flexibility for the develop-
ment of adequate interdisciplinary interpretations of social reality.
It is therefore obvious that the term 'market economy' is used here to
define the concrete system that emerged in a specific place (Europe) and at
a particular time (two centuries ago) and not as a general historical category
of an approach aiming to show the evolution of the economic system
throughout history, as the Marxist concept of the mode of production
supposedly does. The methodological approach adopted in this book is
based on the premise that it is impossible to derive 'general' theories about
social or economic evolution which are based on 'scientific' or Objective'
views of social reality (see Chapter 8).
Finally, it should be noted that in this book the market economy is not
identified with capitalism, as is usually the case. The market economy is
defined here as the self-regulating system in which the fundamental
economic problems (what, how, and for whom to produce) are solved
'automatically', through the price mechanism, rather than through con-
scious social decisions. Of course, this does not mean that in a market
economy there are no social controls at all. Here, we should introduce an
important distinction between the various types of social controls which
will help us to interpret today's marketization and internationalization of
the economy.
There are three main types of possible social controls on the market
economy. There are first what we may call regulatory controls, which have
usually been introduced by the capitalists in control of the market econ-
omy in order to 'regulate' the market. The aim of regulatory controls is to
create a stable framework for the smooth functioning of the market
economy without affecting its essential self-regulating nature. Such con-
trols have always been necessary for the production and reproduction of
the system of the market economy. Examples are the various controls

5
TOWARDS AN INCLUSIVE DEMOCRACY

introduced at present by the latest round of GATT, or by the Maastricht


Treaty, which aim at regulating the world and the European markets
respectively in the interest mainly of those controlling the respective
markets (multinationals, big Europe-based national and multinational
firms, etc.). Second, there are what we may call social controls in the broad
sense which, although they have as their primary aim the protection of
those controlling the market economy against foreign competition, yet
may have some indirect effects that could be beneficial to the rest of society
as well. A primary example of such controls is the various protectionist
measures aiming at protecting domestic commodities and capital markets
(tariffs, import controls, exchange controls, etc.). Finally, there are what
we may call social controls in the narrow sense which aim at the protection of
humans and nature against the effects of marketization. Such controls are
usually introduced as a result of social struggles undertaken by those who
are adversely affected by the market economy's effects on them or on their
environment. Typical examples of such controls are social security legisla-
tion, welfare benefits, macro-economic controls to secure full employ-
ment, etc. In the rest of this book, unless otherwise stated, 'social controls'
refers to this last category of social controls in the narrow sense. As shown
later in this chapter, those controlling the neoliberal internationalized
market economy aim at the abolition of social controls (both in the narrow
and broad senses) but not of regulatory controls.
The market economy, as defined above, is a broader term than capital-
ism. The former refers to the way resources are allocated, whereas the
latter refers to property relations. Thus, although historically the market
economy has been associated with capitalism, namely, private ownership
and control of the means of production, a market allocation of resources is
not inconceivable within a system of social ownership and control of
economic resources. The distinction drawn between capitalism and the
market economy is particularly useful today when many in the self-styled
'Left', after the failure of the planned socialist economy, rediscover the
merits of a 'socialist' market economy. At the same time, several 'commu-
2

nist' parties in the South (China, Vietnam, etc.) have embarked on a


strategy to build a 'socialist' market economy and are in the process of
achieving a synthesis of the worst elements of the market economy
(unemployment, inequality, poverty) and 'socialist' statism (authoritarian-
ism, lack of any political freedom, etc.). As this book will, hopefully, make
clear, the objective of a new liberatory project should not merely be the
abolition of capitalist property relations but that of the market economy
itself.
The first part of the chapter will discuss briefly the long historical period
preceding the emergence of the market economy system. This will be
6
T H E M A R K E T ECONOMY

followed in the second part by a discussion of the historical phases in the


marketization process.

Pre-'market economy' markets


The process of marketization is one that, through the gradual lifting of
social controls on the markets, tends to transform all goods and services
into commodities and to convert citizens to mere consumers. Although
the market today permeates all aspects of life, from family life to culture,
education, religion, and so on, it can easily be shown that, despite the fact
that markets have existed for a very long time, the marketization of the
economy is a new phenomenon which has emerged in the past two
centuries. Thus, as Karl Polanyi notes in his classic book The Great
Transformation:
Previously to our time no economy has ever existed that even in principle was
controlled by markets . . . [A]lthough the institution of the market was fairly
common since the later Stone Age, its role was no more than incidental to
economic life . . . [W]hile history and ethnography know of various kinds of
economies, most of them comprising the institution of markets, they know of
no economy prior to our own, even approximately controlled and regulated by
markets . . . . All economic systems known to us up to the end of feudalism
3

in Western Europe were organised either on the principles of reciprocity or


redistribution or householding (i.e., production for one's own use) or some
combination of the three. 4

The motives, therefore, that ensured the functioning of the economic


system derived from custom, law, magic, religion - but not gain. Markets,
up to the end of the Middle Ages, played no significant role in the
economic system. Even when, from the sixteenth century on, markets
became both numerous and important, they were strictly controlled by
society, under conditions that, as described ably by Petr Kropotkin, made
a self-regulating market unthinkable:
The internal commerce was dealt with entirely by the guilds not by the
individual artisans — prices being established by mutual agreement... [A]t
the beginning external commerce was dealt with exclusively by the city and it
was only later that it became the monopoly of the merchants' guild and later
still of individual merchants . . . [T]he provisioning of the principal consumer
goods was always handled by the city, and this custom was preserved in some
Swiss towns for corn until the middle of the 19th century 5

As a rule, both ancient and feudal economic systems were rooted in


social relations, and non-economic motives regulated the distribution of
material goods. The goods of everyday life, even in the early Middle Ages,
7
TOWARDS AN INCLUSIVE DEMOCRACY

were not regularly bought and sold in the market. This, combined with
the fact that prior to the Industrial Revolution neither labour nor land was
commodified, makes it clear that the marketization process had not begun
before the rise of industrialism. Thus, it was only at the beginning of the
last century that a self-regulating market was created which, for the first
time in human history, established the institutional separation of society
into an economic and a political sphere. Under neither tribal, feudal nor
mercantile conditions was there a separate economic system in society. 6

Still, economic liberalism projected backwards the principles under-


lying a self-regulating market onto the entire history of human civilization,
distorting, in the process, the true nature and origins of trade, markets and
money, as well as of town life. However, almost all anthropological or
sociological assumptions contained in the philosophy of economic liberal-
ism have been refuted by social anthropology, primitive economics, the
history of early civilization and general economic history. For instance,
there is no evidence on which to base the assertions that to expect payment
for labour is 'natural' for humans ('Even in the Middle Ages payment for
work for strangers is [sic] something unheard of' ), nor that the motive of
7

gain is 'natural'. The same applies to another crucial assumption of


economic liberalism that markets, as well as money, would spontaneously
arise if humans were left alone. In fact, both markets and money do not
arise from within the community but from without. Trade itself does not
8

rely on markets, and even medieval commerce developed from the


beginnings under the influence of export trade rather than local trade and
was inter-communal in character rather than trade between individuals.
Furthermore, local markets had no tendency to grow - a fact that implies
that, contrary to liberal (and Marxist) received wisdom, there is nothing
'inevitable' about the marketization of the economy. Thus, as Henri
Pirenne points out: 'It would be natural to suppose, at first glance, that a
merchant class grew up little by little in the midst of the agricultural
population. Nothing, however, gives credence to this theory.' 9

Nation-states and markets


Similarly, there is no inevitability whatsoever concerning the related, and
parallel to the marketization process, rise of the modern nation-state,
which Marxists see as part and parcel of 'modernity' and progress. Thus,
in the Marxist view, the nation-state is a stage in the historical develop-
ment, a stage, which - by promoting the progress of industrialization -
creates the necessary conditions for socialism. Marx himself supported fully
the 'unity of great nations which, if originally brought about by political
force, has now become a powerful coefficient of social production'. But,
10

in fact, as Bookchin observes:

8
T H E M A R K E T ECONOMY

If we bear in mind the large number of municipal confederacies that existed in


Europe during the 11th century and in the centuries that followed it, the
certainty so prevalent in modern-day historiography that the nation-state
constitutes a 'logical' development in Europe out of feudalism can only be
regarded as a bias. 11

Thus, although the state appeared some 5500 years ago in Egypt, when
the creation of an economic surplus made economic inequality possible,
nation-states had not started to develop until the fourteenth to sixteenth
centuries. In fact, it was not until the end of the seventeenth century that
the present form of the nation-state emerged. And this was not without
considerable resistance from the free cities of the era and rebellious
villages.
The idea of a 'nation', as Bookchin also points out, was alien to the
12

ancient mind, and people owed their strongest allegiances to their kin
group and to their community or perhaps region; a Greek 'nation', for
instance, never developed among the Greek polei; similarly, the great
empires of the ancient world were not 'nations' in any sense of the term.
Even in the Middle Ages, as April Carter argues, although some mon-
archies did indeed have their national territories and made claims to
sovereign power within them, these monarchies were just part of Euro-
pean Christendom, so that 'there was little of a national state — indeed there
was little of any sort of state - in the territorial regnum of the Middle Ages;
it was a paradise of Estates rather than the pattern of state'. 13

The inescapable conclusion is that the concentration of power, which


followed the rise of the nation-state and the market economy, had nothing
inevitable about it. The rise of the former was, historically, the outcome of
military violence, whereas that of the latter was the result of economic
violence, that is, of the huge economic inequality which inevitably
followed the drastic lessening of social controls over the market during the
period of the emergence of mechanized mass production. In this way, a
historic reversal took place regarding the role of the state and the market
with respect to the process of concentration of power (political and
economic) in the hands of the ruling elites. Before the start of the
marketization process, it was mainly through political - in the broad sense
- means (conquest, confiscation, expropriation, slavery, religious power)
that power became concentrated. The role of the state in particular was
decisive in this process, whereas that of the market was not significant.
However, once the marketization process had been set in motion, it was
mainly through economic means (the market itself) that power was
accumulated, whereas the state largely legitimized this process.

9
TOWARDS AN INCLUSIVE DEMOCRACY

The emergence of market economies


The crucial element that differentiates the market economy from all past
economies (where markets were also self-regulating, since all markets tend
to produce prices that equalize supply and demand) was the fact that, for
the first time in human history, a self-regulating market system emerged -
a system in which markets developed even for the means of production,
that is, labour, land and money. The control of the economic system by
the market, according to Polanyi, 'means no less than the running of
society as an adjunct to the market: instead of economy being embedded
in social relations (as in the past), social relations are embedded in the
economic system'. Competition, which was the motor force of the new
14

system, ensured that the grow-or-die principle characterized its dynamics.


These same dynamics imply that the market economy, once installed, will
inevitably end up as an internationalized economy.
This does not mean, however, that some type of evolutionary process
can explain the move from pre-'market economy' forms of economic
organization to the present internationalized market economy, as Marxists
attempt to do. In fact, the market economy itself did not actually 'evolve'
out of a feudal era but literally exploded, particularly in England, during
the eighteenth and especially the nineteenth centuries. In other words,
15

contrary to what liberals and Marxists assert, the marketization of the


economy was not just an evolutionary process, following the expansion of
trade under mercantilism. Here, however, we should distinguish between
the three main forms of trade, that is, foreign trade, which involved the
exchange of goods (usually luxuries) not available in a region; local trade,
which involved the exchange of goods that were not worth transporting
because of their weight, bulkiness or perishable nature; and internal or
national trade, which involved similar goods from different sources offered
in competition with one another. It was only the latter form of trade that
was competitive in nature, in contrast to the other two which had a
complementary character. Furthermore, it was national trade that played
an instrumental role in the marketization process, since it was its expansion
that resulted in the 'nationalization' of the market, rather than the
expansion of local or foreign trade.
But, if modern markets did not evolve out of local markets and/or
markets for foreign goods, the question arises as to what factors could
explain the marketization process. Here, the nation-state, which was just
emerging at the end of the Middle Ages, played a crucial role: (a) by
creating the conditions for the 'nationalization' of the market (mercantilist
phase); and (b) by freeing the market from effective social control (liberal
phase of marketization).
The emergence therefore of the nation-state, which preceded the
10
T H E M A R K E T ECONOMY

marketization of the economy, had the effect not only of destroying the
political independence of the town or village community, but also of
undermining their economic self-reliance. At the ideological level, the
formation of national states was accompanied by the rise of nationalism: in
other words, a new ideology, which attempted to create an identification
between the individual and the abstract entity of the state, in place of the
former identification of it with the community.
However, the fact that the state usually played a crucial role in the
marketization process, and that, during the nineteenth century in parti-
cular, many of the newly formed nation-states were involved in a system-
atic effort to establish and protect a domestic market economy, does not
imply a strict causal relationship; it would be wrong to attribute a cause and
effect relationship to the rise of the nation-state and the rise of the 'national
economy'. Although it is true that the victory of the nation-state over
confederal forms of organization usually favoured the expansion of a
market economy, in other cases, as Bookchin points out, it simply led to
state parasitism and outright regression. 16

As regards the role of the state in the mercantilist phase, it should be


noted that before the commercial revolution, trade was not national but
municipal or inter-community in character, bringing towns and villages
together in regional networks and local markets but not in national ones.
The newly emerging nations were merely political units consisting,
economically, of innumerable self-sufficient households and insignificant
local markets in the villages. The formation of a national or internal market
was resisted by the fiercely protectionist towns and municipalities. Only
wholesalers and rich merchants were pressing for it. No wonder that it was
only by virtue of deliberate state action in the fifteenth and sixteenth
centuries that the 'nationalization' of the market and the creation of
internal trade were achieved. As Kropotkin points out:
17

[T]he 16th century — a century of carnage and wars — can be summed up


quite simply by this struggle of the nascent state against the free towns and
their federations . . . the role of the nascent state in the 16th and 17th
centuries in relation to the urban centres was to destroy the independence of
the cities . . . to concentrate in its hands the external commerce of the cities and
ruin it. . . to subject internal commerce as well as manufacturers totally to the
control of a host of officials.18

The 'nationalization' of the market was followed in the sixteenth and


seventeenth centuries by further state action, the outcome of which was to
undermine to an even greater extent the political and economic independ-
ence of the cities and to ruin village communes. This action involved the
confiscation or 'enclosure' of communal lands - a process that was
11
TOWARDS AN INCLUSIVE DEMOCRACY

completed in Western Europe by the 1850s." The effect was not only to
destroy community links in towns and villages but also to create the
foundations for the marketization of the economy, as both labour and land
were now being released, in plentiful quantities, to be bought and sold in
the emerging labour and land markets.
Nevertheless, mercantilism, with all its tendency towards commerciali-
zation, never attacked the institutional safeguards which protected labour
and land from being marketized. The social controls on labour and land,
which, under feudalism, had taken the form of custom and tradition, were
simply replaced, under mercantilism, by statutes and ordinances. There-
fore, the 'freeing' of trade performed by mercantilism merely liberated
trade from localism; markets were still an accessory feature of an institu-
tional set-up regulated more than ever by society. Up until the Industrial
Revolution, there was no attempt to establish a market economy in the
form of a big, self-regulating market. In fact, it was at the end of the
eighteenth century that the transition from regulated markets to a system
of self-regulated ones marked the 'great transformation' of society, that is,
the move to a market economy. Up until that time, industrial production
in Western Europe, and particularly in England, where the market
economy was born, was a mere accessory to commerce. The use of
machines in production and the development of the factory system
reversed this relationship. The marketization of land, labour and money,
which were crucial elements in the industrial process, was therefore, as
Polanyi described it:
. . . the inevitable consequence of the introduction of the factory system in a
commercial society . . . [T]he fiction of their being produced as commodities
became the organising principle of society . . . [H]uman society has become an
accessory to the economic system . . . [T]he transformation implies a change
in the motive of action on the part of the members of society: for the motive of
subsistence that of gain must be substituted. All transactions are turned into
money transactions . . . Prices must be allowed to regulate themselves. 20

The marketization of labour and land were particularly significant.


Under the guild system, working conditions as well as the wages of the
workers were regulated by society, that is, by the custom and rule of the
guild and the town. The same applied to land: the status and function of
land was determined by legal and customary rules (whether its possession
was transferable or not and if so under what restrictions, for what uses,
etc.). The removal of labour and land from social control has led to the
creation of new forms of domination and, at the same time, has destroyed
the traditional fabric of the guild workers' communities, village commu-
nities, the old form of land tenure and so on. For instance, the principle of

12
T H E M A R K E T ECONOMY

freedom from want was equally acknowledged in every type of social


organization up until the beginning of the sixteenth century: the indivi-
21

dual in a primitive society was not threatened by starvation unless the


whole community starved. Hunger, which was a necessary element of a
self-regulating market, presupposed the liquidation of organic society. In
fact, some argue that, contrary to popular and economic wisdom, people
are relatively less well off now than they were in the Middle Ages! 22

One could therefore speculate that only a drastic change in the eco-
nomic structure of Western European society at the time of the Industrial
Revolution could have averted the marketization of society — a change
that would have made the use of machines, in conditions of large-scale
production, compatible with the social control of production. But such a
change would have required a social revolution towards economic de-
mocracy to accompany the Industrial Revolution. As such a revolution
did not materialize at the time, what followed was inevitable. Factories
could not secure continued production unless the supply of means of
production (especially, labour and land) was organized. But in a commer-
cial society, the only way to organize their supply was to transform human
activity and natural resources into commodities, whose supply did not
depend on the needs of human beings and the ecosystem respectively, but
on market prices. Therefore, the introduction of new systems of produc-
tion to a commercial society, where the means of production were under
private ownership and control, inevitably led (with the crucial support of
the nation-state) to the transformation of the socially controlled econo-
mies of the past, in which the market played a marginal role in the
economic process, into the present market economies.
Private control of production required that those controlling the means
of production would have to be economically 'efficient' in order to
survive competition, i.e. they had to ensure:
• the free flow of labour and land at a minimal cost. However, under
conditions of private control of production, this flow has an inverse
relationship to the social controls (in the narrow sense) on the market.
Thus, the more effective the social controls on the market, and in
particular on the markets for the means of production (labour, capital,
land), the more difficult it is to ensure their free flow at a minimal cost.
For instance, legislation to protect labour made the labour market less
flexible and, consequently, the flow of labour less smooth or more
expensive. Therefore, historically, those having private control of the
means of production have always directed their efforts towards further
marketizing the economy, that is, minimizing the social controls on the
market;
13
TOWARDS AN INCLUSIVE DEMOCRACY

• the continual flow of investments into new techniques, methods of


production and products, in an effort to improve competitiveness, and
the sales figures (a logic aptly expressed by the motto 'grow or die'). 23

The outcome of this process is economic growth. Therefore, it is not a


coincidence that 'the modern idea of growth was formulated about four
centuries ago in Europe when the economy and the society began to
separate', although the growth economy itself emerged much later, after
24

the market economy was initiated at the beginning of the nineteenth


century, and only flourished in the post World War II period.
The rest of the chapter will examine the process of marketization, to be
followed in Chapter 2 by a discussion of the growth economy. We may
distinguish three main phases in the marketization process: (a) the liberal
phase, which, after a transitional period of protectionism, led to (b) the
statist phase; and (c) the present neoliberal phase.

The marketization process: the liberal phase


The move to a market economy represented a break of society with the
economy. Once the two had been separated, the logic of the system
created its own unstoppable dynamic. Those controlling production had
to be 'efficient' (in terms of sales and cost) in order to survive the
competition within a market-based system of production. Efficiency, in
turn, depended, as we saw above, on investing in new techniques and
products and the consequent massive expansion of production (i.e. eco-
nomic growth) and on securing a free flow of 'labour' and 'land' at a
minimum cost (i.e. marketization). The former fuelled the grow-or-die
dynamic that has characterized market economy production and has led to
the present multidimensional crisis. The latter implied the commodification
of labour and land. But, as Polanyi points out:
labour and land are no other than the human beings themselves of which
every society consists and the natural surroundings in which it exists; to
include labour and land in the market mechanism means to subordinate the
substance of society itself to the laws of the market.
25

To my mind, Polanyi's significant contribution was that he expressed


the fundamental contradiction of the market economy system not in terms
of an economic conflict between productive relations and productive forces
(where the productive relations from forms of development of the pro-
ductive forces 'turn into their fetters'), as Marx assumed, but in terms of
26

a broader social conflict between the requirements of the market economy


and those of society; in particular, in terms of the conflict created by the
fact that in a market economy labour and land have to be treated as

14
T H E MARKET ECONOMY

genuine commodities, with their free and fully developed markets,


whereas in fact they are only fictitious commodies.
Thus, as soon as a market economy was established, a ceaseless social
struggle started. Schematically, this is the struggle between those control-
ling the market economy, i.e. the capitalist elite controlling production
and distribution, and the rest of society. Those controlling the market
economy aimed at marketizing labour and land as much as possible, that is,
at minimizing - at best eliminating - all social controls on them, so that
their free flow, at a minimum cost, could be secured. On the other hand,
those at the other end, particularly the growing working class, aimed at
maximizing social controls on labour and land, that is, at maximizing
society's self-protection against the perils of the market economy,
especially unemployment and poverty.
At the theoretical and political level, this conflict was expressed by the
clash between economic liberalism and socialism (in a broad sense). Economic
liberalism sought to establish a self-regulating market, using as its main
methods laissez-faire, free trade and regulatory controls. On the other
hand, socialism sought to conserve humans (although not nature, given the
socialist identification of Progress with economic growth, see Chapter 2)
as well as productive organization, using as its main methods social controls
on the markets. This struggle constituted the central element of European
history, from the Industrial Revolution to date. Thus, the emergence of
early economic liberalism, under conditions not securing its continuous
reproduction (liberal phase of marketization), was followed by the rise of
socialist statism, defined as the historical tradition that aims at the conquest
of state power, by legal or revolutionary means, as the necessary condition
to bring about radical social change. Socialist statism was succeeded, in
turn, by the present mature economic neoliberalism (neoliberal phase).

The advent of economic liberalism


Once the transition from socially controlled markets to a system of self-
regulated ones was affected at the end of the eighteenth century (the
institutionalizing of the physical mobility of labour in England in 1795 was
a crucial step in this transition) then the conflict between those controlling
the market economy and the rest of society started in earnest. Thus, almost
immediately, a political and industrial working-class movement emerged
and, as a result of its pressure, factory laws and social legislation were
introduced. In 1824, for instance, the British Combination Acts of 1799
and 1800, which ruled that unions were a conspiracy against the public
because they restricted trade, were repealed. However, all these institu-
tional arrangements were incompatible with the self-regulation of the
markets and the market economy itself. This incompatibility led to a

15
TOWARDS AN INCLUSIVE DEMOCRACY

counter-movement by those controlling the market economy in England,


which ended up with the taking of legal steps to establish a competitive
labour market (1834), the extension of freedom of contract to the land
(between 1830 and 1860) and the abolition of export duties and reduction
of import duties in the 1840s. In fact, the 1830s and the 1840s (not unlike
the 1980s and the 1990s) were characterized by an explosion of legislation
repealing restrictive regulations and an attempt to establish the foundations
of a self-regulating market, that is, free trade, a competitive labour market
and the Gold Standard - namely, the system of fixed exchange rates where
the value of a currency was fixed to the value of gold.
As regards the Gold Standard in particular (which was adopted by
Britain as early as 1821, to be followed by France and the United States in
the 1850s and Germany in 1870, becoming universal in 1880), its sup-
posedly automatic adjustment mechanism was a central element in this
process. The aim of the Gold Standard was to create an international stable
environment for world trade, similar to the domestic stable environment
that had already been established for national trade; in other words, to
create an internationalized market economy by fixing the value of curren-
cies. A pure gold standard would require countries to give up central
banking, as Ludwig von Mises advocated, since central banks' actions
represented a form of intervention in the workings of a self-regulating
system. This was particularly so if central banks, in their action, were
guided by political (in the broad sense) criteria, expressing society's self-
protection against the workings of the market mechanism. However, such
a pure form was never applied. Instead, the system historically was
associated with the creation of new token currencies based on the
sovereignty of the central banks of issue. The national currency, in turn,
played a crucial role in establishing the nation-state as the decisive
economic and political unit. No wonder that only countries which
possessed a monetary system controlled by central banks were reckoned
sovereign states. Thus, both the currency and the central bank were not
just expressions of a new nationalism but necessary prerequisites to cushion
the effects of the gold standard on a country's income and employment.
The movement towards free trade reached its peak in the 1870s,
marking the end of the system of privileged trading blocs and restricted
commerce which characterized the growth of the colonial empires in the
pre-1800 period. Although universal free trade was not attained during
this time since, at the end, only Britain and Holland adopted policies of
complete free trade, for a brief period in the 1860s and the 1870s the world
came close to a self-regulating system, as envisaged by classical economic
theory. 27

So, the nineteenth century saw the first attempt at an internationalized


16
T H E M A R K E T ECONOMY

market economy. This is shown by the massive expansion of the move-


ment of commodities as well as capital and labour that took place during
this period. This expansion was not, of course, an unexpected develop-
ment, given that the precondition for the reproduction of the newly
established market economy was its continuous growth, and this growth,
in turn, necessitated the continuous expansion of the market, initially of
the domestic market and later of the external market. Regarding the
expansion of trade, it is estimated that the value of international trade
doubled between 1830 and 1850, and at least trebled and may have nearly
quadrupled in the period up to 1880, reaching a peak annual growth rate
of 5.3 per cent in the period 1840-70. As far as capital movements are
28

concerned, from the end of the Napoleonic wars until the mid-1850s
about $2000 million was invested abroad; by 1870 the value of these
investments had trebled and by 1900 they totalled $23,000 million,
reaching $43,000 million in 1914. As for the movement of labour,
29

between 1821 and 1915 the total recorded world immigration amounted
to just over 51 million people. 30

It is therefore obvious that international trade and the movement of


capital and labour across frontiers played a major role in helping the newly
emerged market economy to become a growth economy, although the
extent to which the economic growth of individual countries was depend-
ent on the existence of the international economy is still a matter for
research. What is certain is that the pace of conversion differed from
country to country, depending mainly on the availability of flexible
markets — a crucial factor in the failure of the first historical attempt
31

towards a liberal internationalized market economy that we turn to


next.

The rise of protectionism and nationalism


The attempt to establish a purely liberal internationalized market econ-
omy, in the sense of free trade, a competitive labour market and the Gold
Standard, did not last more than 40 years, and by the 1870s and 1880s
protectionist legislation was back. Thus, the aim to liberalize the markets
in the first phase of the marketization process had the paradoxical effect of
leading to more protection: either because of pressure by those controlling
production to be protected from foreign competition, or because of
pressure by the rest of society to be protected against the market mechan-
ism itself. Both types of protectionism had the effect of undermining the
marketization process, as we shall see in more detail in the next section.
As regards protectionism in favour of those controlling the market
economy, the return to protectionism in the form of tariffs and other trade
restrictions was evident in the 1880s and was reinforced by the parallel rise
17
TOWARDS AN INCLUSIVE DEMOCRACY

of nationalism. Protectionism gathered momentum in the entire period


from 1880 to 1913 when in effect only Britain, Holland and Denmark
adhered to free trade. However, trade continued expanding although not
as fast as in the earlier period of 1840-70. Thus, in the period 1840-1914
world trade grew at an average annual rate of 3.4 per cent, significantly
faster than the growth in production (2.1 per cent per annum). As a result,
the ratio of international trade to production from barely 3 per cent in
1800 had, by 1913, reached 33 per cent. 32

At the same time, protectionism in the form of social controls (narrow


sense) on the market also intensified. Even British liberals had to legalize
the activities of trade unions in 1871. It was also significant that not just
England, but France and Prussia as well passed through a similar process: a
period of laissez-faire, followed by a period of anti-liberal legislation with
respect to public health, factory conditions, social insurance, public util-
ities and so on. Thus, 'At the end of the nineteenth century, across Europe
and the US, governments legislated to limit the workings of laissez-faire —
first by inspecting factories and offering minimal standards of education
and later by providing subsistence income for the old and out of work.' 33

As a result, by the beginning of the twentieth century, social legislation of


some sort was in place in almost every advanced market economy. 34

If, therefore, at the beginning of the nineteenth century the ruling


philosophy was internationalist, in the form of liberal nationalism (free
trade, etc.), by the 1870s liberal nationalism started turning into national
(or nationalistic) liberalism, with an emphasis on protectionism and im-
perialism abroad. The consequence of such protectionist pressures was that
by the end of the Depression of 1873—86, which marked the end of the
first experiment with pure economic liberalism, Germany had already
established an all-round social insurance system and high tariff walls,
whereas the United States had established even higher tariff walls, despite
the commitment to free markets.
By the same token, both types of protectionism (i.e. tariffs and social
controls) contributed to the rise of nationalism, a movement that was very
much in ascendance during the second part of the last century, especially
among the 'latecomers' to nationhood, Germany and Italy. The demand
for nation-states did not just express the needs of those controlling the
economy to get rid of the variety of commercial and industrial laws which
had become an intolerable obstacle to their developing industry and
expanding trade, as Engels argued in connection with the creation of the
German nation-state:
The desire for a united 'Fatherland' had a very material foundation . . . it
was the demand arising from the immediate needs of practical businessmen

18
T H E M A R K E T ECONOMY

and industrialists for the elimination of all the historically out-dated rubbish
which obstructed the free development of industry and trade. 35

In fact, the nation-state, after its historic victory over the alternative
confederal forms of organization, was seen as the only social form that
could provide effective protection not only for domestic capital against
foreign competition, but also for labour and land against the detrimental
effects of the domestic market. Therefore, the rise of nationalism cannot be
seen as separate from the emergence of the market economy and it was as
'inevitable' as the emergence of the nation-state and the market economy.
In other words, nationalism cannot be seen as an inevitable dimension of
modernity, unless viewed within a specific problematic that assumes that
36

the only feasible course for history was the one that was actually taken.

Protectionism leads to statism


Protectionism, in both its forms considered above, undermined the market
economy that had been established in the nineteenth century and, in fact,
led to its near collapse in the twentieth. It undermined, first, the domestic
market economy by distorting the price mechanism and obstructing the
self-regulation of markets so that, eventually, 'unadjusted price and cost
structures prolonged depressions, unadjusted equipment retarded the
liquidation of un-profitable investments, [and] unadjusted price and in­
come levels caused social tension'. It undermined, secondly, the world
37

market economy by leading to colonial rivalry and competition for


markets still unprotected. As a result of protectionist policies, the world
economy, on which the nineteenth-century balance-of-power system had
rested, started disintegrating. This inevitably led to the near collapse of the
system itself because, as Polanyi has persuasively shown, the Ί00 years'
38

peace' (1815-1914) crucially depended on two freedoms: the freedom of


trade and the freedom of capital. Therefore, once colonial rivalry started
having its effect on both freedoms, World War I became inevitable.
But it was not only the balance-of-power system that collapsed as a
result of protectionist policies. The Gold Standard system, on which the
stability of exchanges crucially depended, also could not stand the pressures
of protectionism. The precondition for its adjustment mechanism (i.e. the
mechanism which supposedly eliminates imbalances in the balance of
payments among the countries taking part in the system) to work effi-
ciently was that adjustment should be achieved through changes in
nominal' variables (prices, wages, interest rates) rather than through the
much more painful — socially and economically - changes in 'real' variables
(production, employment). However, protectionist measures, either in
favour of those controlling the market economy (tariffs, etc.) or in favour

19
TOWARDS AN INCLUSIVE DEMOCRACY

of the rest of society (e.g. social insurance legislation, protection of trade


unions, etc.) had the effect of distorting wages and prices and therefore
obstructed the efficient functioning of the adjustment mechanism which
had to rely on changes in income and employment to bring about the
required adjustment.
In the 1920s, therefore, serious obstacles to the self-regulating function
of the market mechanism were created, not just on strict economic
39

grounds (mainly, to protect the value of currencies) but also on political


grounds, and in particular to reduce social tension in the aftermath of the
1917 Russian revolution. Wages became 'too rigid'. In Britain, for
instance, as D. Moggridge points out: 'The General Strike (1926) removed
the possibility of widespread reductions in money wages and costs, if only
because attempts at reductions were too expensive socially and economic-
ally.' The inevitable outcome was the collapse of the Gold Standard
40

system in the 1930s — a crucial event for the rise of statism. In fact, the
abandonment of the Gold Standard was a necessary condition for the
expansion of the economic role of the state. This is so because deficit
budget policies - a basic tool of statism - were not compatible with the
Gold Standard which required the domestic economic policy to be
subordinated to achieving an external balance. For instance, during the
Great Depression, countries with deficits in the balance of payments were
forced by the system to suffer further deflation in order to achieve external
balance. This took place at the very moment that millions of people were
unemployed, and domestic expansionary policies rather than deflationary
policies were necessary to reduce unemployment!
The breakdown of the Gold Standard was, in effect, reflecting the world
economy's disintegration, which had been in progress since the beginning
of the century, as a result of the serious distortions introduced to the free
functioning of the markets by anti-liberal legislation (factory laws, un-
employment insurance), trade union activity and so on. To the extent that
society's self-protection against the market economy was successful, the
market economy itself was devitalized and eventually almost collapsed in
the 1930s, during the Great Depression. Therefore, as Polanyi also stresses,
it was the collapse of pure liberalism which set the foundations for the near
collapse of the market economy itself in the 1930s and opened the way for
the rise of statism. Thus, as Goldfrank describes Polanyi's thoughts on the
matter:

As nations became more enmeshed in the world market, the more powerful
ones turned to social legislation, tariffs and other forms of protectionism to
blunt the effects of unequal exchanges. From protectionism and imperialism it

20
T H E M A R K E T ECONOMY

was a short step to world war and from the misguided post-war attempt to
restore the Gold Standard it was a short step to depression.
41

The marketization process: the statist phase


The outcome of the disintegration of the world economy and of the
collapse of the Gold Standard was that all major countries entered a period
of active state interference to control the economy; in other words, they
entered the period of statism - an event that marked a new phase in the
marketization process which was, one may argue, the logical conclusion of
protectionism which flourished during and after World War I and 4 2

reached its peak in the 1930s with the adoption of many direct restrictions
on trade, such as import and export licensing, quotas and exchange
controls.
The extreme example of statism was of course Stalinist Russia, where,
for the first time since the establishment of the market economy in the
nineteenth century, a 'systemic' attempt was made to reverse the market-
ization process. It was in the 1930s that the collectivization of farms
removed land from the market. This development, in turn, may also be
attributed to the disintegration of the world economy, resulting in its
inability to absorb Russia's agricultural surplus and the consequent Russian
inability to base industrial development on imports of machinery from the
West. Furthermore, the introduction of the 5-year plans removed from
the market most important economic decisions. Yet, these decisions did
not come under the jurisdiction of society at large. As we shall see in the
next chapter, the concentration of political and economic power at the
hands of the communist party bureaucracy, in combination with the non-
abandonment of the wage system, meant that the effect of socialist statism
in Eastern Europe - from the viewpoint of the concentration of power —
was just a change in the personnel of the ruling elite rather than the
elimination of the elite itself. In other words, the place of capitalists in the
ruling elite who had been controlling indirectly — through the market
system, the economic process (i.e. what, how and for whom to produce),
was simply taken over by bureaucrats, who controlled it directly - through
the central planning system.
However, it was not just Russia (to be followed after World War II by
several other countries on the periphery and semi-periphery of the
capitalist system) that introduced statism. In the period between the mid-
1930s and the mid-1970s, active state interference to control the market
mechanism was the norm all over the capitalist world. Although the forms
of statism in the West were not as comprehensive as in the East, and, of
course, did not take the form of a 'systemic' change, the aim, especially in
the post-World War II period, was similar. In other words, the aim was

21
TOWARDS AN INCLUSIVE DEMOCRACV

not just to help the private sector flourish under some minimal social
controls (as, for example, is the case with Clintonomics, or the economics
of the 'new' British Labour party under Tony Blair today) but rather to
supplant the private sector itself, especially in the areas where the private
sector has failed to cover the needs of the whole population - mainly, with
respect to the provision of social services (health, education, social in-
surance, public utilities).
It may be useful to divide the statist phase of marketization into two
major periods: first, the period from about 1933 up to and including the
war period itself and, second, the post-war period, up to about the mid-
1970s.

Pre-war statism
The foundation for statism was set in the interwar period during the Great
Depression, which, following the 1929 crash, pushed the market economy
into a general crisis. During this period, several countries introduced
various degrees of statism to recover from the Great Depression. The most
drastic form, within the market economy framework, was introduced in
Nazi Germany. Well before the German economy was converted to a war
footing, there was 'considerable supersession of the free market', which
43

took the form of budget deficit policies financed by the creation of new
money (in fact, such policies were in place ten years before the rise of
Hitler and had led to the German hyper-inflation), price and wage
controls, state direction of private investment and so on. Even in the
bastion of free enterprise, the United States, Roosevelt's New Deal
involved actively promoting the devaluation of the dollar, state inter-
ference in determining prices and wages, large construction projects, as
well as increased employers' contributions to the social security fund. The
same pattern of drastic state intervention and interference with the pricing
mechanism (in place of the relatively neutral state role in the economy -
typified by balanced budget policies - that liberal orthodoxy required) was
repeated in several other countries at the time (France, Sweden, etc.).
All cases of state interventionism in the pre-war period were successful
in the broad objective of saving the market economy from collapse; still,
the methods used were utterly anti-liberal, as their aims were not to
enhance the marketization process but, instead, to constrain it. Further-
more, almost all cases were successful in the narrow objective of expanding
production and employment without creating other problems, such as
inflation. Was this proof that, after all, an effective social control of the
market is feasible, as social democrats have always maintained? A further
examination of the conditions under which the above success was ach-
ieved indicates that the answer to the question has to be negative.

22
T H E M A R K E T ECONOMY

One should not forget that the period under consideration was quite an
exceptional one, that is, a period when the market economy itself was
threatened with extinction. The fact, for instance, that 'business con-
fidence' was at its lowest could go a long way in explaining the very
tolerant attitude of those controlling production towards measures en-
croaching on their economic power and profits. In fact, it was only when
- and as long as — state interventionism had the approval of those
controlling production that it was successful, as the following examples
clearly show.
In the United States, it was the initially tolerant stand of capital towards
Roosevelt's budget deficit policies that resulted in the significant contribu-
tion of those policies to the early phases of the recovery (1934-36). It was,
also, the US capitalists' change of mind, once recovery was under way,
which resulted in a renewed pressure to balance the federal budget and,
consequently, to a new recession (1937-38). 44

In Germany, the significant success of Nazi economic policies (despite


the much higher degree of statism involved, which included direct
interference in the investment and pricing decisions of individual firms)
was due to the fact that, as Bleaney puts it, 'the Nazis were accepted by
business as infinitely preferable to revolution, a faith which they promptly
justified by the abolition of trade unions and all other political parties'. 45

On the other hand, in France, where the Popular Front Government of


the Left attempted a drastic form of statism involving social reforms (cuts in
working hours, mandatory paid holidays, etc.) and income redistribution
in favour of the working classes, the attempt ended up in failure. Although
unemployment was reduced drastically, inflation accelerated sharply, as
those controlling production passed cost increases on to the consumers,
and the government was unable to impose effective price controls.
Furthermore, no significant recovery was achieved afterwards; as a result
of the socialist nature of several of the reforms, the Front's policies were
greeted by the familiar tactics of the flight of capital abroad and the refusal
to invest domestically.
The conclusion is that the success or failure of pre-war statism did not
depend on strict economic factors (as liberals and Marxists usually assume)
but on political factors, that is, on whether the expansion of the state's
economic role enjoyed the support of those controlling production,
namely, what is euphemistically called 'business confidence', or not.
Though the Nazi form of statism and its implied attack against the
market economy was to find an inglorious end under the ruins of the
Third Reich, the form of statism that developed in the West was luckier:
it flourished for another 30 years or so after the end of the war. And, in fact,
there were significant differences between the Nazi and Western forms of
23
TOWARDS AN INCLUSIVE DEMOCRACY

statism. Thus, whereas the former was of a 'nationalist' character, mainly


due to political and military considerations, the latter was much more
internationalist - a conclusion derived also by Polanyi, in the context of a
different problematic. In effect, the post-war model of statism in the
46

West was an evolution of the pre-war model.


During the war itself, statism, as one could expect, reached new heights.
State planning, although necessitated by the war effort, had the side effect
of showing the peacetime possibilities of conscious social control of the
economy. This 'demonstration effect', combined with the radicalization
of the electorate in the West (following the failure of the market economy
in the 1930s and the defeat of fascism in the war) gave a new impetus to
statism.

The social-democratic consensus


Britain, which, since the Industrial Revolution and up to date, has always
played the role of the 'marketization barometer', set the foundation for the
welfare state, that is, the form of statism that was to mark post-war history,
up to the middle of the 1970s. The starting point in the establishment of
the post-war welfare state was the Beveridge Report, whose explicit aim
was 'to establish social security for all, from the cradle to the grave'. It was
47

published in 1942 and represented a conscious effort to check the side


effects of the market economy, as far as covering basic needs (health,
education, social security) was concerned. Two years later, a coalition
government dominated by the Conservatives inaugurated what has been
called the social-democratic consensus and published a White Paper on
Employment Policy, which committed the government (a commitment
observed by governments of all persuasions up to the rise of neoliberalism)
to full employment policies through aggregate demand management, that
is, through manipulation of the market. In effect, what this commitment
meant was the formal recognition of the fact that the market was not
capable of self-regulation, at least as far as the level of production and
employment was concerned. Similarly, 'maximum employment' was
recognized as the main policy objective by the US Employment Act of
1946. Comparable institutional changes took place all over the advanced
capitalist world in the late 1940s, so that one may conclude that this period
marks the beginning of the social-democratic consensus, which was to last
into the 1970s.
However, the social-democratic consensus that emerged in the post-
war period was not just a conjunctural phenomenon, as sometimes argued,
but a structural change with significant implications at the economic,
social, political and ideological/theoretical levels (that I will consider here)
as well as at the cultural level.
24
T H E M A R K E T ECONOMY

At the political level, the social-democratic consensus was actively


supported by social-democratic parties and trade unions and enjoyed the
tolerance of capital and its political representatives. Thus, conservative
parties were succeeding social-democratic ones, without changing in its
essentials the new socio-economic role of the state with respect to the
market. Despite some spasmodic privatizations of nationalized industries,
particularly in Britain, governments all over the advanced capitalist world
were following full employment policies and were expanding continually
the welfare state and the public sector in general. The Old Left was also,
explicitly or implicitly, part of this consensus, whereas parties and organi-
zations that supported aims which were incompatible with the above
institutional framework sought outlets in extra-parliamentary opposition,
alternative cultures, or even in urban guerrilla tactics in a hopeless and self-
contradictory attempt to function as catalysts for radical social change.
At the economic level, the social-democratic consensus was founded on
modern industrial society, which, at its post-war peak, was characterized
by mass production, big production units, bureaucratic organization and
mass consumption. The state's economic role was crucial in a process of
intensive accumulation that relied mainly on the enlargement of the
domestic market. This involved not just an indirect role in influencing the
level of economic activity through fiscal policy and the welfare state, but
also direct action on the production side of the economy through nation-
alized enterprises and public investment. As the degree of internationaliza-
tion of the economy during this period was relatively small and therefore
the state's 'degrees of freedom' in implementing a national economic
policy were much more significant than today, the new state role was both
feasible and desirable. To the extent, therefore, that the post-war invest-
ment boom was continuing, the budget deficits, which inevitably fol-
lowed, did not create any further problems in the accumulation process.
In fact, the period of the social-democratic consensus was associated
with an unprecedented boom. The average annual rate of growth of per
capita income in advanced capitalist countries rose from 1.4 per cent in
1820-1950 to 3.8 per cent in 1950-70. Also, capital accumulation in-
creased from 2.9 per cent in 1870-1913 and 1.7 per cent in 1913-50 to 5.5
per cent in 1950-70. Leaving aside the controversial issue of whether a
48

causal relationship may be established between the expansion of the state's


economic role and the boom, there is little doubt that statism played a
49

significant role in keeping unemployment at unprecedented low levels


throughout the period under consideration. The low levels of unemploy-
ment were not simply due to budgetary deficit policies, as is sometimes
wrongly argued. In fact, OECD governments were more or less in budget
balance for the period of the social-democratic consensus as a whole. A 50

25
TOWARDS AN INCLUSIVE DEMOCRACY

more fruitful way to explain the high levels of employment in that period
would be to take into account the overall effect of statism on the economy
and in particular the optimistic business expectations that counter-cyclical
state intervention by itself creates, as well as the various restrictions on the
51

right of employers to sack employees, implemented particularly rigorously


in the nationalized sector of the economy where overmanning was
notorious. Thus, whereas the unemployment rate in the 16 more
advanced capitalist countries was on the average 5.7 per cent in the
1870-1913 period and reached 7.3 per cent in 1913-50, it dropped to an
average 3.1 per cent in 1950-70. At the same time, the welfare state
52

expanded rapidly, and by the early 1970s about one-fifth of the Gross
Domestic Product (GDP) in advanced capitalist countries (apart from
Japan) was spent on social expenditures. Indicative of the rapid growth of
53

the welfare state during this period is the fact that social expenditures in
Britain, which had risen from 4 per cent of the Gross National Product
(GNP) in 1910 to about 11 per cent in the interwar period, had reached an
average of about 25 per cent in the early 1970s. 54

At the social level, the social-democratic consensus had been associated


with conditions of relative job security, enlargement of the labour market
(following the mass entry of women into production during the post-war
boom) and belief in a future of continuous economic growth and expan-
sion of the welfare state. The above factors, combined with the fact that
the working class was still numerically strong, had led to the emergence of
a strong trade union movement which, through its bureaucratic leadership
and particularly through its unofficial organizations (shop stewards' move-
ment), exercised significant influence in controlling the market. Further-
more, within this climate, a series of strong liberation movements emerged
among women, students and ethnic minorities. A crisis of social institu-
tions was in progress, and large social groups were questioning the very
foundations of the modern hierarchical society: the patriarchal family, the
authoritarian school and university, the hierarchical factory or office, the
bureaucratic trade union or party. In effect, all those movements were
challenging the supposedly democratic character of society in the broader
social realm.
The social consensus relied on the explicit or implicit agreement
between capital and trade unions, and/or the political parties representing
their interests, aiming at the reproduction of the mixed economy, that is, of
the economic system that expressed the social-democratic consensus. The
consensus involved a state commitment to secure high levels of employ-
ment and a 'social wage' (in terms of social services), in exchange for a
trade union commitment to check workers' demands, so that the increase
in real wages (increase in wages minus the rate of inflation) did not exceed

26
T H E M A R K E T ECONOMY

the rise in productivity. The agreement was usually formalized in the form
of wage and price controls, which, throughout the period of the social-
democratic consensus, had played a significant role in checking inflation
without encroaching on profits.
Finally, at the ideological/theoretical level, following the glorious post-
war victory of Keynesianism (i.e. the social-democratic reformist trend
within the orthodox economics profession) over the conservative neo-
classical trend (i.e. the dominant economics paradigm during the earlier
phase of the marketization process up to the war), the social-democratic
consensus was firmly established among social scientists as well. The basis
of the new orthodoxy, which covered both economic theory and eco-
nomic policy, was state (macro-economic) control over the market in
order to achieve the objectives of full employment, maximum economic
growth and, to a certain extent, the redistribution of income in favour of
weaker income groups.
In concluding, one could argue that what Polanyi meant by the term
Great Transformation was to some extent achieved during the period of the
social-democratic consensus. The market system, particularly labour and
money, were put under significant social controls. Thus, as regards labour,
not only the level of employment, but also the conditions of work and
wages were left to be determined outside the market. This was done
through fiscal policies and wage and price controls designed within the
context of tripartite agreements between labour, capital and government.
Also, as regards money, although neither investments nor savings were
taken out of the control of the market, both directing investments and
regulating the rate of savings became government tasks. This was done
through aggressive monetary policies and controls, direct and/or indirect
control of investment, and so on.
With the abandonment of the Gold Standard, whose adjustment
mechanism was incompatible with any form of statism, in the 1930s the
value of currencies was left to be determined by foreign exchange markets.
The system of flexible currencies was more compatible with statism since,
by leaving the value of currencies to the care of foreign exchange markets,
it allowed more freedom for state interventionist!! in the economy.
Nevertheless, as the system of flexible rates was thought to have negative
repercussions on the expansion of foreign trade, because of the uncertainty
it created in international exchanges, the system was prompdy abandoned
immediately after the war.
So, a new system of managed flexibility was established under the Bretton
Woods Agreement of 1944. The new system was intended to match the
requirements of both statism and free trade and was therefore designed as
a compromise between the Gold Standard and the system of flexible
27
TOWARDS AN INCLUSIVE DEMOCRACY

currencies. In other words, the Bretton Woods system was intended to


provide an international monetary system that would have constituted a
compatible foundation for the international statist model that had already
emerged in the pre-war period, by ensuring the economic sovereignty of
nation-states with respect to domestic economic policies, as well as
stability as regards the value of currencies. However, despite the fact that
the Bretton Woods system initially succeeded in this aim, in the end, the
contradictions within it, and especially the fact that it enshrined the
dominance of the US dollar - an arrangement that at some stage became
incompatible with the change in the world balance of economic forces as
a result of the rise of Japanese and German economic power — brought
about its downfall at the beginning of the 1970s. This fact contributed
significantly to the demise of statism. Nation-states initially attempted to
keep their economic sovereignty by reverting to a system of flexible rates,
which, as long as capital and exchange controls were in place, could secure
their economic sovereignty. However, as soon as these controls were
abolished under market pressure, independent economic policies and
statism itself became doomed.

The internationalization of the economy and the


collapse of statism
Despite the expansion of statism at the national economic level, the
marketization process at the international level (in the sense of gradual lifting
of controls on the movement of commodities and later of capital), which
was interrupted after the Great Depression and the explosion of protec-
tionism that followed, was resumed. Thus, commercial rivalries between
major capitalist nations and the consequent old nationalist rivalries, which
characterized the first half of the twentieth century and led to two world
wars, were swiftly overcome and replaced by a rapid expansion of trade
(mainly between themselves). World exports increased by an average
annual rate of 7 per cent in the period 1948-73 whereas global economic
output grew at an average rate of 5 per cent. As a result of these trends, by
55

the early 1970s, one-sixth of manufacturing products consumed in Europe


were imported from abroad. Thus, whereas import penetration (imports as
a percentage of the domestic market for manufactures) within Europe was
only 6 per cent in 1937 and 1950, it increased to 11 per cent in 1963 and
17 per cent in 1971, that is, at a level significantly higher than the 1913
level of 13 per cent. Similarly, exports, as a percentage of the GDP,
56

increased in Europe from an average of about 19 per cent for the entire first
quarter after the war up to 1973, to almost 26 per cent in the period
1974-79. 57

The post-war internationalization of the market economy was actively


28
THE M A R K E T ECONOMY

encouraged by the advanced capitalist countries particularly in view of the


expansion of 'actually existing socialism' and of the national liberation
movements in the Third World. However, the internationalization was
basically the outcome of 'objective' factors related to the dynamics of the
market economy and, in particular, to the expansion of multinational
corporations' activity and the parallel growth of the Eurodollar market.
The Eurodollar market provided a regulation-free environment where US
dollars (and later other strong currencies like the yen, mark etc.) could be
borrowed and lent free of any US regulatory and tax requirements. The
growth of this new market, which simply reflected the growing needs of
multinational corporations, was instrumental in the later lifting of ex-
change and capital controls. This is because the exchange controls of
nation-states, particularly those in Britain where the Eurodollar market
originated, were put under severe strain, throughout the 1970s.
58

So, the institutional arrangements adopted in the post-war period to


liberalize the markets for commodities and capital, at the planetary level
(GATT rounds of tariff reductions), at the regional level (the European
Economic Community (EEC), European Free Trade Association
(EFTA)) and at the national level (abolition of capital and exchange
controls in the US and Britain in the 1970s, etc.) mostly institutionalized
rather than created the internationalized market economy. It was the
market economy's grow-or-die dynamic that created it.
Growing internationalization implied that the growth of the market
economy relied increasingly on the expansion of the world market rather
than on that of the domestic market, as before — a fact that had very
significant implications with regard to the state's economic role. During
the period of social-democratic consensus, economic growth rested
mainly on the growth of domestic demand which accounted for almost 90
per cent of total demand in advanced capitalist countries. In this frame-
work, the state sector played an important part in controlling the size of the
market through the manipulation of aggregate demand. The means used
for this purpose were government spending and public investment, as well
as the economic activity of nationalized enterprises. The necessary condi-
tion, however, for the economic system's efficient functioning was the
relatively low degree of internationalization, that is, a degree which was
compatible with an institutional framework relatively protective of the
domestic market for commodities, capital and labour. It was precisely the
negation of this condition, as internationalization of the market economy
grew, that made the continuation of the social-democratic consensus
impossible.
An indication of the above trends is given in Tables 1.1 and 1.2.
Although the growth rate of exports is shown in Table 1.1 to be
29
TOWARDS AN INCLUSIVE DEMOCRACY

Table 1.1 Average annual growth rates in OECD high income


economies 1

Government Private Gross Exports of Gross


spending consumption domestic
2
goods and domestic
investment services 3
product
1960-70 4.8 4.3 5.6 8.4 5.1
1970-80 2.6 3.5 2.3 6.0 3.2
1980-93 2.1 3.0 3.4 5.1 2.9
1. This is the set of countries that are members of the Organisation for Economic Co-operation and
Development (OECD) and which the World Bank classifies as 'high income economies', namely, the
United States, Canada, Japan, Australia, New Zealand, the European Union (apart from Greece and
Portugal), Switzerland and Norway.
2. Includes all current expenditure for purchases of goods and services by all levels of government.
3. The value of factor services such as investment income, interest and labour income is excluded.

Source: World Bank, World Development Report (1981 and 1995).

consistently higher than that of national income (GDP), this does not
necessarily mean that exports had always been the engine of growth. In
fact, the growth rate of exports historically has always exceeded that of
income, and there is a variety of theoretical explanations for this phenom-
enon. In other words, to assess the significance of a component of total
59

demand, like that of exports or government spending, with respect to the


overall growth rate of the economy, we have to compare not just growth
rates but also the 'weights' of the respective components in total demand
and income (Table 1.2). By a comparison of Tables 1.1 and 1.2 we can
derive the following conclusions.
• First, although between the 1960s and the 1980s there is a general
decline in growth rates, the fall in the growth rate of government
spending is significantly higher than that of exports.
• Second, the proportion of income in advanced capitalist countries
which is accounted for by exports increased by two-thirds in the last
three decades, whereas the proportion of government spending, after
reaching a peak in the last decade, seems to be declining in this decade,
despite the extra government spending caused by the massive rise of
unemployment and poverty.
• Third, as a result of these growth trends, whereas in the 1960s the ratio
of government spending to income was significantly higher than that of
exports to income, today exactly the opposite is the case.
Under conditions of growing internationalization, the size of the
growth economy increasingly depends on supply conditions, which in
turn determine trade performance, rather than on direct expansion of
domestic demand. Supply conditions play a growing role with respect to
30
T H E M A R K E T ECONOMY

Table 1.2 Distribution of Gross Domestic Product (GDP) (%) in


OECD high income economies

Government Private Gross domestic Exports of


spending 1
consumption investment goods and
services 2

1960 15 63 21 12
1965 15 61 23 12
1970 16 60 23 14
1978 18 60 22 18
1987 18 61 21 18
1993 17 63 19 20
1. See notes in Table 1.1 fur definitions of government spending and exports.
2. As import figures are not included in the table the sums in each row do not add up to 100.

Source: World Bank, World Development Report (various years).

accumulation and economic growth, since it is international trade that


determines the size of each national growth economy, either positively
(through an exports-led growth) or negatively (through an imports-led
de-industrialization). In other words, competitiveness, under conditions
of free trade, becomes even more crucial, not only with respect to an
increasingly export-led growth, but also with respect to import penetra-
tion that ultimately leads to domestic business closures and unemploy-
ment. To put it schematically, the market economy, as internationalization
grows; moves from a 'domestic market-led' growth economy to a 'trade-
led' one.
In the framework of a trade-led growth, the prevailing conditions on
the production side of the economy, in particular those relating to the cost
of production, become critical: squeezing the cost of production, both in
terms of labour cost and in terms of employers' taxes and insurance
contributions, becomes very important. But squeezing the cost of produc-
tion necessitated a drastic reduction in statism, since statism was respons-
ible for a significant rise in the cost of production during the period of the
social-democratic consensus, both directly and indirectly. Directly, be-
cause the expansion of the welfare state meant a growing burden on
employers' contributions and taxes. In Britain, for instance, total taxes as a
proportion of company profits (excluding National Insurance contribu-
tions) increased from about 44 per cent in 1955-59 to 48.6 per cent in
1967—70. Indirectly, because, under the conditions of near-full employ-
60

ment which prevailed during the statist phase of the marketization process,
organized labour could press successfully for wage rises that exceeded
significantly the increase in productivity. This became a particularly
painful problem (for those controlling the market economy) in the period

31
TOWARDS AN INCLUSIVE DEMOCRACY

1968—73, when a massive strike movement, effectively autonomous from


the trade union bureaucratic leadership, led to a fast rise in wages and a
corresponding encroachment of profits. Thus, whereas in the period
1960—68 actual post-tax real wages and productivity in advanced capitalist
countries increased at about the same rate (4 per cent), in 1968—73, the
former increased by an average of 4.5 per cent versus a rise of 3.4 per cent
in the latter. As a result, the share of profits in business output fell by
61

about 15 per cent in 1968-73. 62

The cumulative effect of not letting the labour market - free of state
intervention - determine the levels of wages and employment, as a market
economy requires, was the crisis of the early 1970s. In other words, the
crisis, contrary to the usually advanced view, was not mainly due to the oil
crisis but to the fact that the degree of internationalization of the market
economy achieved by then was no longer compatible with statism. This
was because:
(a) the nation-state's effective control of the economy had become
almost impossible in the framework of an increasingly free movement
of capital (and commodities) across borders. Although international
trade openness increased significantly in the post-war period, the lack
of financial openness allowed governments to follow independent
economic policies. However, as soon as the development of euro-
currency markets significantly reduced the effectiveness of controls on
financial markets, multinational corporations saw their power to
undermine those national economic policies which were incompat-
ible with their own objectives effectively enhanced;
(b) the expansion of statism itself had certain built-in elements leading to
inflation and/or a profitability squeeze, which were both particularly
troublesome within the competitive framework that the internation-
alized market economy has created. Such an element was the rapid
rise of state spending - to finance the expansion of the state's social
and economic role - which in some cases was faster than the rise of
state revenue leading to an inflationary financing of the resulting
budget deficits. An even more significant element was the fact that
63

employers, in order to minimize the impact on profits due to


'excessive' wage rises (i.e. wage rises exceeding the rises in produc-
tivity), successfully passed a significant part of the increased labour cost
on to the consumers under the pretext of the oil crisis. However, the
growing internationalization of the economy and the intensified
competition which followed it made the passing of 'excessive' wage
rises on to prices increasingly difficult. The result was that the profits
squeeze mentioned above became even worse in the late 1970s. In
32
T H E M A R K E T ECONOMY

OECD Europe, for instance, profitability in terms of net profit share


in manufacturing fell from 21.8 per cent in 1968 to 20.9 per cent in
1973 and to 17.4 per cent in 1979. 64

The upshot was the 'stagflation' crisis of the 1970s which became
inevitable once governments, to reduce the inflationary pressures created
by the above trends and the oil crisis, embarked on traditional deflationary
policies. Thus, not only did inflation not decelerate but also unemploy-
ment started rising significantly, as deflationary policies enhanced short-
term unemployment, on top of the long-term unemployment which at
that time was also expanding, as a result of the emerging information
revolution.
In conclusion, the collapse of statism and the rise of neoliberalism we are
going to discuss next have to be seen within the context of the growing
internationalization of the market economy, which has made statism
increasingly incompatible with it.

The marketization process: the neoliberal phase


The flourishing of the neoliberal movement
The economic crisis of the 1970s, which was exacerbated by the collapse
of the Bretton Woods system and the return to the uncertainties of flexible
currencies, led to the rise of the neoliberal movement. In contrast to the
Liberal Old Right that was founded on tradition, hierarchy and political
philosophy, the Neo-Liberal New Right's credo was based on blind belief
in the market forces, individualism and economic 'science'. Individual-
65

ism has taken on a new meaning, since its aim is the citizen's liberation
from 'dependence' on the welfare state. Thus, the liberatory demands
of the 1960s for a society of self-determination are distorted by neo-
liberals and reformulated as a demand for self-determination through
the market!
The neoliberal movement, which first emerged among the economists
in academia (the Chicago School, resurrection of Hayek and so on) and
later on spilled over among professional politicians, especially in the
United Kingdom and the United States, represented a powerful attack
against social-democratic statism. However, what is interesting is the fact
that neoliberal theorists attacked not just statism but 'excessive' democracy
itself as the cause of the economic crisis, a sure indication of the incompati-
bility of the capitalist growth economy and democracy. Thus, several
neoliberal critics of the social-democratic consensus, including Samuel
Huntingdon, Daniel Bell and J.M. Buchanan, blamed 'excessive' demo-
cratic participation (i.e. the increasing influence of social controls over the

33
TOWARDS AN INCLUSIVE DEMOCRACY

market in the early post-war period and the consequent rise of the welfare
state) as the main factor which has seriously undermined capitalist
development. For Huntingdon, the masses' mobilization and the uncon-
66

trollable democratic participation have led to a huge increase in state


expenditure and the chronic fiscal crisis which undermines economic
development. For Daniel Bell, the welfare state has led to the expansion of
an uncontrollable hedonistic consumerism which downgrades the protes-
tant ethic of austerity, saving and hard work, on which the development of
Western capitalism was founded. Finally, for J.M. Buchanan, the political
and state-bureaucratic elites, following a cost-benefit logic, keep expand-
ing state provision as this expansion implies higher rewards with respect to
the more corrupt parts of these elites and more political influence for the
rest. No wonder that in a report to the Trilateral Commission (which had
members from the three main economic regions, North America,
Western Europe and Japan) Huntingdon et al. argued that the 'democratic
surge' of the 1960s created an 'excess of democracy' which had increased
demands on government for services, weakened its authority and gen-
erated inflation. 67

It is therefore obvious that the target of the neoliberal movement was


the social controls on the market that had been introduced during the
statist phase of the marketization process. Social-democratic statism, in the
form of nationalizations, full employment policies and the welfare state,
has always been seen by the economic elites as undermining private
capital's hegemony, through the creation of a tripartite system of eco-
nomic power (the state, trade unions and capital). Once therefore a
combination of economic and political factors made it possible, the attack
against the social-democratic consensus became inevitable. The main
economic factor was, as we have seen above, the internationalization of
the economy which became incompatible with social-democratic statism.
The political factors point to the decline of the Left, as a result of the
expansion of the middle classes at the expense of the manual working class,
and the parallel collapse of 'actually existing socialism'.
The ultimate neoliberal aim was, therefore, to enhance the power of
those controlling the economy, through drastically reducing social control
over the market. The main policies proposed by neoliberals and subse-
quently implemented first by the Thatcher/Reagan administrations and
later by governments all over the world have been the following ones:
• Liberalization of markets. The labour market is the main target of
liberalization. Thus, many important controls are being eliminated and
others are being drastically amended with the explicit aim to make
labour more 'flexible', that is, more amenable to market conditions
34
T H E M A R K E T ECONOMY

('hire-and-fire culture'). In fact, however, the aim is 'to turn labour into
a commodity - not only in the way wages and conditions are set, but also
the way labour is managed in the workplace'. The weakening of these
68

controls, combined with the abandonment of the full employment state


commitment and the anti-trade union legislation, meant that the effects
of the technological changes, which had led to structural unemploy-
ment, have not been offset by effective state action; instead, it was left to
the market forces to sort out the unemployment problem. Furthermore,
neoliberal policies, by restricting the state sector, have contributed
directly to the rise of unemployment. As a result, unemployment has
become massive, while poverty and inequality have also grown in
proportion with the deregulation of the labour market. Thus, un-
employment in advanced capitalist countries (the 'Group of 7' ('G7'),
i.e., the seven more advanced capitalist countries: the USA, Japan,
Canada, Germany, France, Britain and Italy) increased by 56 per cent
between 1973 and 1980 (from an average 3.4 per cent to 5.3 per cent of
the labour force ) and by another 50 per cent since then (from 5.3 per
69

cent of the labour force in 1980 to 8.0 per cent in 1994). Also, as
70

regards the neoliberal myth about the creation of jobs following the
deregulation of the labour market, recent studies show that most of the
new jobs consist of low-paid work (usually contingency work) which
replaces relatively well paid full-time employment. Thus, the fact is
celebrated that in the model country of liberalization of the labour
market, the USA, open unemployment is about half that in the Euro-
pean Union (5.6 per cent in 1995 versus 10.7 percent). ' What is usually
7

not mentioned is that some 30 per cent of the labour force in the USA
is now composed of contingency workers and that the vast majority of
72

'new' jobs are paid much less than the old ones. Second, capital markets
have also been liberalized, particularly international financial markets
(lifting of exchange controls, etc.). The liberalization of capital markets
has increased the opportunities for tax evasion, eroded the tax base
required for the financing of the welfare state, made capital flight much
easier and — more important - made impossible any kind of indicative
planning and effective control of domestic aggregate demand. Thus,
huge amounts of money move around in search of speculative gains and
effectively undermine the ability of governments to follow macro-
economic policies which significantly diverge from those of their
competitors. Finally, as we saw above, commodities markets have also been
liberalized, mainly as a result of the latest GATT agreement. The overall
outcome of these liberalization policies was that 'by the early 1990s, an
almost fully liberal order has been created across the OECD region,
35
TOWARDS AN INCLUSIVE DEMOCRACY

giving market actors a degree of freedom that they had not held since the
1920s'. 73

• Privatization of state enterprises. Privatizations are significant not


only because they reduce the size of the state sector but also because they
create new opportunities for private capital. Furthermore, the spreading
of share ownership is promoted as a kind of 'popular capitalism', despite
the fact that, as the British experience has shown, the concentration of
capital is further enhanced by privatization. Thus, despite the fact that
the number of shareholders tripled in the 1980s, after the massive
privatizations of Thatcher's government, the proportion of shares held
individually, rather than by capitalist firms and institutions, fell from 54
per cent in 1963 to 28 per cent in 1981 and to 20 per cent in 1988. 74

• Reduction of the welfare state into a safety net and parallel


encouragement of the private sector's expansion into social
services (health, education, pension schemes and so on). This not only
leads to the marketization of sectors of the economy that used to be
under state control, but it also further reduces the 'social wage' and
makes labour even more 'flexible' to market conditions.
• Redistribution of taxes in favour of high income groups. In
Britain, for instance, the top income earners took the lion's share of the
tax reductions engineered by the Thatcher governments between
1979-80 and 1990-91. Thus, the top earners (1.6 per cent of taxpayers)
received almost 30 per cent of the total reduction in taxes, whereas the
11 per cent of income earners at the bottom received less than 2 per cent
of the tax cuts. The explicit aim of such tax cuts is to create 'incentives'
75

for the economic elite to save and invest, whereas the implicit aim is to
increase post-tax profits and spread the cost of the safety net. The
inevitable outcome of neoliberal tax policies has been a further worsen-
ing in the distribution of post-tax income.

As a result of these policies, profitability, which had slumped at the end of


the statist period, has been almost restored to the levels achieved at the
peak of the post-war boom. Thus profitability in European manufactur-
ing, which had reached a nadir 17.4 per cent in 1979, by 1989 increased to
23.7 per cent, not far from the 26 per cent achieved in 1952-66. 76

The neoliberal consensus


The internationalization of the economy and the neoliberal policies
coincided with significant technological changes (information revolution)
marking the move of the market economy to a post-industrial phase. The
combined effect was a drastic change in the employment structure which
reduced massively the size of the manual working class. For instance, in the
36
T H E M A R K E T ECONOMY

G7 (minus Canada), the proportion of the active population employed in


manufacturing fell by over a third between 1972—73 and 1992-93 (from an
average of 31 per cent in 1972-73 to 20 per cent in 1992-93). This fact 77

had significant implications on the strength and significance of trade


unions and social-democratic parties. Thus, in the US, trade unions have
been decimated in just two decades, their membership falling from about
35 million to 15 million. In Britain, 14 years of Thatcherism were
78

enough to bring down trade union membership from 13.3 million in 1979
to under 9 million in 1993 and the proportion of union members (31 per
cent) to the lowest level since 1946. At the same time, in Britain again,
79

the proportion of the active population in non-manual work increased


from 12.8 per cent in 1951 to 31.9 per cent in 1978. As a result of these
80

trends, the structure of the British electorate changed drastically, with the
proportion of the manual working class falling from a half to a third of the
electorate within just 20 yean (1964-83). 81

Thus, a new class structure has emerged in the post-industrial inter-


nationalized market economy which, broadly, may be defined as follows.
At the two extremes are what we may call the underclass and the overclass.
The underclass consists mainly of the unemployed and those of the inactive
(which do not consist merely of women staying at home as before, but,
mostly, of men of working age and single parents) and the underemployed
(part-timers, casual workers, etc.) who fall under the poverty line. People
from the young age group, women, ethnic minorities and immigrants are
disproportionately represented in the underclass. In Britain, it has been
estimated that the 'absolutely disadvantaged' (a term defined similarly to
the underclass) constitute about 30 per cent of the adult working popula-
tion, which, according to another study, controls less than 14 per cent
82 83

of income. At the other end of the scale is the new overclass, namely the
upper middle class that has been created by the marketization process,
which isolates itself in barbed wire enclosures - luxury ghettos to match
84

the misery ghettos of the underclass. The upper middle class, together with
the upper class itself, constitute a very small percentage of the population
but receive a disproportionately large part of income. In the USA, for
instance, the top 1 per cent of family groups controlled in 1988 13.5 per
cent of all income before taxes. 85

Finally, between these two poles are the middle groups which con-
stitute the vast majority of the population. If we take the British example
again, these middle groups constitute about 70 per cent of the population.
However, it is only the upper part of these middle groups, consisting of
about 40 per cent of the population, which is, according to Hutton, the 86

privileged minority, and electorally, according to Galbraith, the contented


87

electoral majority. It is only this part of the population which is in full-time,


37
TOWARDS AN INCLUSIVE DEMOCRACY

well-paid and secure jobs and controls the bulk of income. In advanced
capitalist countries, the top 40 per cent of the population on average
control almost two-thirds of income and, by their political and economic
88

power, determine the electoral outcome. On the other hand, the lower
part of the middle groups, consisting of about 30 per cent of the popula-
tion, includes all those in low-paid, insecure and poorly protected jobs (the
marginalized and the insecure according to Hutton). Most of the growing
army of part-timers and occasional workers in low-paid jobs with no
formal employment protection, as well as the traditional blue-collar low-
skilled working class, belong to this category.
Therefore, the post-industrial neoliberal society is not even a 'two-
thirds society' as it used to be described. It is in fact a '40 per cent society'.
The social groups constituting this privileged minority are, basically,
hostile to any expansion of statism and the welfare state and are increas-
ingly attracted by the ideology of the private provision of services like
health, education and pensions - although a significant part of this
'attraction' is forced by the neoliberal undermining of the state provision
of these services. Their attitude towards statism and the welfare state is
determined by the fact that public services and their financing by taxation
have a disparate effect on the privileged minority and the underclass. In
other words, it is, mainly, the privileged minority which has to finance,
through taxation, public services in which they are not interested anymore
(because of the deterioration in their quality as a result of neoliberal
policies). As the privileged minority is also the electoral majority (because
they take an active part in the electoral process, whereas the underclass
mostly do not bother to vote, frustrated by the inability of political parties
to solve their problems), the electoral outcome in advanced capitalist
countries is determined by the attitudes of the privileged minority/
electoral majority.
The inevitable result of the above changes in the class structure and
composition of the electorate has been the rapid decline of traditional
social-democratic parties and their attempt to capture a significant part of
the vote of the privileged minority by 'modernizing' themselves, accord-
ing to the guidelines of the neoliberal agenda. So, in the last 15 years or so,
all major social-democratic parties, either in power (France, Sweden) or in
opposition (Germany, Britain) have abandoned traditional social-
democratic policies like the commitment to full employment and the
welfare state and adopted, with minor variations, the essence of the
neoliberal programme (privatizations, liberation of markets and so on), in
the name of liberating the 'civil society' from statism! To all this, they
usually try to add a 'social dimension'. The pathetic social-democratic
38
T H E M A R K E T ECONOMY

attempt to add such a dimension to the new EU treaties is a case in


point.
The upshot of these changes at the political level has been the
'Americanization' of the political process all over the advanced capitalist
world. In place of the traditional contest between, on the one hand, social-
democratic parties supporting the case for further expansion of the state's
role and, on the other, conservative parties praising the advantages of the
market economy and attempting to slow down statism, electoral contests
have now become beauty contests between the leaders of bureaucratic
parties, characterized by minimal programmatic differences and a common
objective: state-craft, that is, the management of power. A neoliberal
consensus has swept over the advanced capitalist world and has replaced
the social-democratic consensus of the early post-war period.
Apart from the political implications, the neoliberal consensus has very
important implications at the social, ideological, cultural and, of course,
the economic level. Starting with the economic level, the new consensus
does not imply that the state has no more economic role to play. One
should not confuse liberalism/neoliberalism with laissez-faire. As I men-
tioned earlier, it was the state itself that created the system of self-regulating
markets. Furthermore, some form of state intervention has always been
necessary for the smooth functioning of the market economy system. The
state is called today to play a crucial role with respect to the supply side of
the economy and, in particular, to take measures to improve competitive-
ness, to train the workforce to the requirements of the new technology,
even to subsidize (directly or indirectly) export industries. Therefore, the
type of state intervention which is compatible with the marketization
process not only is not discouraged but, instead, is actively promoted by
the neoliberal consensus, especially by the 'progressive' elements within it
(Clinton administration, social-democratic parties in Europe). So, it is not
true that the neoliberal consensus has killed off the baby of the social-
democratic consensus, that is, the mixed economy, as it is usually assumed.
In fact, it did something worse. It redefined the content of the mixed
economy so that it can better serve the interests of the economic elite and
reproduce, on the threshold of the twenty-first century, similar conditions
of inequality and social injustice to the ones that prevailed in the beginning
of the nineteenth!
At the social level, the explicit 'one nation' aim of the social-democratic
consensus is being replaced by the implicit '40 per cent society' aim of the
neoliberal consensus. The neoliberal aim is associated with the fear of
unemployment and uncertainty concerning the ability to cover adequately
basic needs (health, education, housing). This uncertainty has contributed
39
TOWARDS AN INCLUSIVE DEMOCRACY

significantly to the retreat of radical currents within the feminist move-


ment, the withdrawal of students from public life, the withering away of
labour militancy and so on. At the same time, the hope invested in the
Green movement has already faded, since the dominant trends within it do
not challenge the fundamental institutions of the market economy but,
instead, either adopt the social-democratic ideology of enhancing the civil
society and resort to environmentalism (Europe) or, alternatively, turn to
irrationalism and mysticism (USA). As a result, the status of hierarchical
structures and institutions, which was challenged in the era of the social-
democratic consensus, is now re-enhanced - although it never recovered.
Still, as regards the social scope of the new consensus, there is a significant
difference with respect to the scope of the social-democratic consensus.
Thus, whereas the latter usually relied on the explicit agreement of capital
and trade unions and frequently took the character of a broad social
consensus, the neoliberal consensus usually is explicitly adopted only
by the upper class and the majority of the '40 per cent society' (which
directly benefit from it) and never takes the character of a broad social
consensus.
At the cultural level, the marketization of culture and the recent
liberalization and deregulation of markets has contributed significantly to
the present cultural homogenization, with traditional communities and
their cultures disappearing all over the world and people converted to
consumers of a mass culture produced in the advanced capitalist countries
and particularly the USA. In the film industry, for instance, even European
countries with a strong cultural background and developed economies
have effectively to give up their own film culture, unable to compete with
the much more competitive US industry. Thus, in the early 1990s, US
share of the films amounted to 73 per cent of the European market.
Indicative of the degree of concentration of cultural power in the hands of
a few US corporations is the fact that, in 1991, a handful of US distributors
controlled 66 per cent of total cinema box office and 70 per cent of the
total number of video rentals in Britain. 89

In fact, the recent emergence of a sort of 'cultural' nationalism in many


parts of the world expresses a desperate attempt to keep a cultural identity
in the face of market homogenization. But cultural nationalism is devoid
of any real meaning in an electronic environment, where 75 per cent of the
international communications flow is controlled by a small number of
multinationals. In other words, cultural imperialism today does not need,
90

as in the past, a gunboat diplomacy to integrate and absorb diverse cultures.


The marketization of the communications flow has already established the
preconditions for the downgrading of cultural diversity into a kind of
superficial differentiation akin to a folklorist type.

40
T H E M A R K E T ECONOMY

Finally, at the ideological level, the neoliberal consensus is dominant.


The conservative liberal tradition in the social sciences, particularly in
economics, has now become the orthodoxy again - after a brief historical
interval when the Keynesian statist ideas were prevalent. Social scientists
have adopted en masse the liberal 'market paradigm', whereas most ex-
Marxists, after the collapse of actually existing socialism, have adopted
various forms of 'social-liberalism' which are fully compatible with the
neoliberal consensus. Equally compatible with the neoliberal consensus is
the post-modernist movement which, as is shown in Chapter 8, by
assigning equal value to all traditions of social organization ends up with a
general retreat to conformism and an implicit (if not explicit) acceptance of
the marketization of society.

The internationalized market economy


The combined effect of the 'objective' (economic and technological)
factors leading to further internationalization and the neoliberal policies to
free the markets was that the internationalization of the market economy
has accelerated sharply since the 1970s. Thus, as far as commodity markets
are concerned, the degree of dependence of the growth economy on the
growth of exports has increased significandy since the 1970s. In advanced
capitalist countries, the average annual growth rate of exports was 1.8
times higher than that of the GDP during the period 1970—93 versus 1.6 in
the period 1960—70. No wonder that in just over 20 years, the ratio of
91

world exports to GDP has grown by 50 per cent (from 14 per cent in 1970
to 21 per cent in 1992) and in the USA, the biggest market economy, this
ratio has almost doubled in the same period — from 6 to 11 per cent — and
is now higher than in Japan. Also, the protection of domestic commodity
92

markets has almost been eliminated within the two major economic blocs
(European Union and North America-NAFTA) and will soon almost
disappear worldwide, following the implementation of the new GATT
agreement. The inevitable outcome of these developments has been that
the average annual rate of growth of imports in the G7 increased by 41 per
cent between the period 1965-80 and the period 1980-93 (from 3.9 per
cent in 1965-80 to 5.5 per cent in 1980-90) and, as a result, import
93

penetration in the major European economies increased by over 60 per


cent between the early 1970s and the end of the last decade. 94

Also, as far as capital markets are concerned, the neoliberal abolition of


exchange controls and restrictions to the movement of capital had a
decisive influence on the internationalization of the market economy. In
fact, according to some observers, the recent significant rise in foreign
direct investment establishes a new trend where investment is tending to
displace trade as the driving force of international integration. Thus,
95

41
TOWARDS AN INCLUSIVE DEMOCRACY

foreign direct investment as a proportion of the advanced capitalist


countries' GDP has nearly doubled in 20 years and now stands at more
than 10 per cent. 96

However, short-term capital movements may be even more important


with respect to the loss of the nation-state's economic sovereignty. It has
been estimated that one trillion dollars a day is changing hands on the
world's foreign exchange markets and that only around 5 per cent of the
deals struck are linked with foreign trade, whereas the rest are purely
speculative. In the early 1970s about 90 per cent of capital movements
97

were linked to investment and trade and only 10 per cent were speculative.
This fact alone may constitute a serious threat to the viability of the growth
economy as Paul Volcker, former chairman of the Federal Reserve,
implied, when he attributed about half of the 50 per cent decline in growth
rates since the early 1970s to the huge growth of currency speculation. 98

But, even if one accepts the counter-argument that short-term capital


flows 'mainly redistribute success and failure around the system and add
little to the structural capacity of economies to generate aggregate
growth', it cannot be disputed that the huge expansion of such capital
99

movements has made it impossible for any nation-state (or even an


economic bloc) to introduce, independently, any effective social controls
on the markets. If we take into account the huge rise in international
borrowing that took place in international capital markets since the
liberalization moves of the 1970s and the significant increase in foreign
100

penetration of national central government bond markets, it becomes


101

obvious that no national government today may follow economic policies


that are disapproved of by the capital markets, which have the power to
create an intolerable economic pressure on the respective country's bor-
rowing ability, currency value and investment flows. If we assume, for
instance, that a social-democratic party adopts, against the trend, expan-
sionary policies in order to reduce unemployment, it may easily be shown
that under conditions of free capital mobility, 'very large depreciations
could result'. Thus, the lifting of controls has led to a situation where 'all
102

Western countries have found that without capital controls they risk
capital flight and an imposed hike in interest rates'. 103

The increasing loss of economic sovereignty that the nation-state faces


in the internationalized market economy is also reflected in the creation of
huge economic blocs, within the context of which the economic role
of the individual nation-state is being progressively downgraded in favour
of supra-national institutions. This applies, in particular, with respect to
the EU, where the relevant process has already begun. But it also applies to
some extent with respect to the North American Free Trade Agreement
(NAFTA). Each of those blocs has its core (Germany, the USA), a number

42
T H E M A R K E T ECONOMY

of metropolitan countries in some degree of dependence with respect to


the core country (Canada, France, the UK, Italy, etc.) and finally its
periphery (Mexico, Mediterranean Europe). Furthermore, significant
moves take place at the moment for the formation of new economic blocs
out of existing regional associations. One could mention the Association
of South-East Asian Nations (ASEAN), the Southern Cone Common
Market in Latin America (MERCOSUR) and the Asia-Pacific Economic
Co-operation zone (APEC) - which plans an enormous trans-Pacific free
trade zone by 2020.
In fact, the same economic aims that brought about the emergence of
the neoliberal consensus have led to the creation of these blocs. The basic
aim is the improved competitiveness of the sections of capital which are
based on each bloc. This improvement is expected to come about mainly
on account of the enlargement of the size of the commodities market and
in particular of the fact that the larger size makes improvements in
productivity much easier, because of the possibility of pooling resources
on research and development. However, once the integration has trans-
cended the commodities market to include the capital and labour markets,
as in the case of the EU, the advantages of forming economic blocs become
even more significant. In that case, an economic bloc creates additional
opportunities to squeeze the cost of production, especially labour cost,
because of the possibility of greater movement of labour and capital. This
is so because - contrary to what orthodox economic theory suggests -
neither free trade nor capital and labour mobility eliminate wage differ-
entials. For instance, in the EU, despite conditions of free trade, capital
mobility and relative free movement of labour, the average gross hourly
earnings of industrial workers (in purchasing power terms) in the periph-
ery (Greece, Portugal) were still half of those at the centre at the end of the
last decade, with no signs of any significant closing in the gap. Instead,
104 105

mobility of capital creates opportunities to invest in areas of low cost,


whereas mobility of labour puts pressure on the wages of high-income
countries. Indeed, if integration within the tight framework of the nation-
state has proved unable to eliminate strong regional differences, which still
persist after decades of statehood (the income of the richest regions in
France, Belgium, Spain, Germany and the Netherlands is double that of
the poorest ones, whereas in Italy it is 2.5 times higher ) one could easily
106

imagine the likely effect of integration within the framework of a much


more loosely connected supra-national bloc.
In Europe, in particular, the complete liberalization of the commodities
markets within the EU block, combined with the liberalization of labour
and money markets, creates a vast economic area where an automatic
43
TOWARDS AN INCLUSIVE DEMOCRACY

system, similar to the Gold Standard system, could now function success-
fully. Indeed, this is the main aim behind the European Monetary Union
(EMU). If we substitute the 'euro', the projected common EU currency,
for gold, Europe will operate under a contemporary Gold Standard system
when the EMU is completed. The reason why such a system is now in a
better position to function more successfully than in the past is that the
basic factor that led to the collapse of the Gold Standard has been
eliminated, that is, the various restrictions on the markets for goods, labour
and capital that have introduced various degrees of 'inflexibility' into
them. Such restrictions, as we have seen, represented society's self-
protection mechanisms against its marketization and led to the near
collapse of the market economy itself. Since the neoliberal consensus has
eliminated most of these restrictions, a historic opportunity has been
created for the marketization process to be completed. The internation-
alized (neoliberal) phase has therefore much better chances of success than
the first (liberal) phase. Of course, there is a price to be paid. The
acceleration of marketization in countries like Thatcher's Britain has led to
a dramatic increase in inequality and one can expect that exactly the same
will happen at the bloc level, as some recent studies also confirm, when
107

advanced capitalist countries would share a common currency and a


central bank with semi-peripheral ones.
With hindsight, it is therefore obvious that Polanyi was wrong in
thinking that the rise of statism in the 1930s was evidence of the utopian
character of the self-regulating market and of the existence of an 'under-
lying social process' which leads societies to take control of their market
108

economies. In fact, statism proved to be a relatively brief interlude in the


marketization process. In this sense, statism was a transitional phenomenon
related to the failure of the first attempt to create a system based on an
internationalized self-regulating market economy. This failure was due
not to the supposedly utopian character of the marketization of society, as
Polanyi thought, but rather to the fact that the objective conditions for the
completion of this process had not as yet been created during the first phase
of marketization, in the nineteenth century.
On the other hand, today, the four institutions on which, according to
Polanyi, the first attempt for a social system based on a self-regulating
market relied, are being restored. Thus:
• the self-regulating market, which at the beginning of the century disinte-
grated (for the reasons we examined above), leading to the collapse of
the first attempt for a system based on an internationalized market
economy, is today more advanced than ever before in history. This is
because of the present degree of freedom that capital and commodity
44
T H E M A R K E T ECONOMY

markets enjoy, the retreat of statism everywhere and the universal


enhancement of flexible markets for commodities, labour and capital. In
other words, this is the outcome of the present degree of marketization
of the economy, in the sense of phasing out all those social controls over
markets which are not compatible with the interests of those controlling
the economy;
• the balance-of-power system, which collapsed during the statist phase, is
today being re-established, within the framework of a United Nations
controlled by the major capitalist countries and the Latinamericaniza-
tion of Russia which gave the USA an exclusive superpower status;
• the liberal state, a creation of the self-regulating market, which, during the
statist phase of marketization, also collapsed in many parts of the world,
both in the North and in the South, is presently omnipresent; and,
finally
• the international Gold Standard, which could not survive the undermining
of the self-regulated market, is today in the process of being restored and
a version of it might reasonably be expected to be in place early in the
next century. Thus, the projected establishment, within the next ten
years, of a kind of European gold standard mechanism, in the form of a
common currency, might be expected to induce, initially, movements
for the establishment of some kind of fixed parities between the three
major international currencies (euro, US dollar and yen), which, at the
end, would logically result in some sort of an international version of the
Gold Standard system, i.e. a global monetary system and possibly a single
currency in a new interlinked economic space which would unify the
richest parts of the world.
In concluding, it is obvious that the rise of neoliberalism is not a
conjunctural phenomenon, as social democrats present it, but that it
represents the completion of the marketization process that was inter-
rupted by the rise of statism. Furthermore, the breakdown of 'actually
existing socialism' in the East and the collapse of social democracy in the
West — as a result, mainly, of the shrinking of its electoral clientele — have
created the political conditions for the completion of the marketization
process. So, the fact that neoliberal policies are supported today by both
conservative and social-democratic parties, in government or in opposi-
tion, and that the basic elements of neoliberalism have been incorporated
into the strategies of the international institutions which control the world
economy (IMF, World Bank), as well as in the treaties that have recently
reformed the EU (Single Market Act, Maastricht Treaty), makes it plainly
evident that we are faced with a new consensus founded on the neoliberal
phase of marketization. This is a consensus that has replaced the defunct
45
TOWARDS AN INCLUSIVE DEMOCRACY

social-democratic consensus and which reflects the radical structural


changes brought about by the development of the internationalized
market economy.

Internationalization and the nation-state

Internationalization or globalization?
One issue that arose recently refers to the question whether what we face
today is the internationalization of the market economy or, alternatively,
its globalization. This is a very important issue because, as we shall see, the
entire social-liberal case that the state can still play a significant role in
controlling the economy rests on an attack against the globalization
thesis.
First, we have to draw a clear line between the case of internationaliza-
tion, as interpreted in this book, and that of globalization. Internationali-
zation, in this book, refers to the case where markets become inter-
nationalized and as a result the economic policies of national governments
and the reproduction of the growth economy itself are conditioned by the
movement of commodities and capital across frontiers. On the other hand,
globalization refers to the case where production itself becomes inter-
nationalized, in the sense that production units become stateless bodies
operating in a borderless world with activities not primarily aiming at the
country which is their national base and involving an integrated internal
division of labour spanning many countries. Our thesis is that although
globalization in the above sense is limited this does not contradict the
argument that the accelerating internationalization, in combination with
the end of statism, does represent a structural change — as was argued above
- rather than just a conjunctural phenomenon.
The main objective of the elites which control today's market economy
is, as it has always been, to maximize the role of the market and minimize
social controls over it, so that maximum 'efficiency' and growth may be
secured. Therefore, social controls in the narrow sense are universally
phased out. The same applies to some significant social controls (broad
sense) like import controls, tariffs, etc. which are also ruled out as
hampering the expansion of the present internationalized market econ-
omy. However, this does not mean the elimination of all controls over the
markets. Not only 'regulatory' controls remain in place and in some cases
are expanded but even some social controls are not eliminated. Examples
of social controls (broad sense) over today's markets are the various 'new
protectionist' non-tariff barriers (NTBs), such as export restraints and
orderly marketing arrangements, especially in steel, textiles and auto-
mobiles, which are implemented by many industrial sectors in advanced

46
T H E M A R K E T ECONOMY

capitalist countries. In fact, the various financial measures taken by the


109

advanced capitalist countries (usually to subsidize their exports), have


deprived the South of half a trillion US dollars a year, according to UN
data. Also, as regards social controls in the narrow sense, although the
110

welfare state is basically left to decay, various 'safety nets' are kept in place
in advanced capitalist countries, to check massive unrest. However, the
safety nets, which target specific categories of people (very poor, etc.), not
only imply the elimination of the basic characteristic of the welfare state, its
universality, but, also, the institutionalization of poverty.
So, the present neoliberal form of the internationalized market econ-
omy may be seen as completing the cycle which started in the last century
when a liberal version of it was attempted. Thus, after the collapse of the
first attempt to introduce a self-regulating economic system, a new
synthesis is attempted today. The new synthesis aims to avoid the extremes
of pure liberalism, by combining essentially self-regulating markets with
various types of safety nets and controls, which secure the privileged
position primarily of the 'overclass' and secondarily that of the '40 per cent
society', as well as the mere survival of the 'underclass', without affecting
the self-regulation process in its essentials. Therefore, the nation-state still
has a significant role to play not only in securing, through its monopoly of
violence, the market economy framework, but also in maintaining the
infrastructure for the smooth functioning of the neoliberal economy.
However, the supporters of social-liberalism assign a much more
important (potential) role to the nation-state. A very recent example is the
study by Paul Hirst and Grahame Thompson who competently put the
111

case for the continuing significance of the nation-state in the framework of


the neoliberal internationalized market economy. Although the authors'
explicit aim is to attack the globalization thesis, usually put forward by the
nationalist Right, their study represents in effect an argument in favour of
the sort of strategy and policies suggested today by the 'civil societarian
Left'. Their argument can be summarized as follows:
(1) The present highly internationalized economy is not unprecedented
and in a sense it is less open and integrated than the regime that
prevailed from 1870 to 1914.
(2) Genuinely trans-national corporations appear to be relatively rare
since most companies are nationally based.
(3) The world economy today is not genuinely global since trade, foreign
direct investment and financial flows are concentrated in the 'Triad
Countries', i.e. the countries in the three main economic regions
(North America, the European Union and Japan).
(4) Therefore, the major economic powers 'have the capacity to exert
47
TOWARDS AN INCLUSIVE DEMOCRACY

powerful governance pressures over financial markets and other


economic tendencies. Global markets are by no means beyond
regulation and control.' 112

It is obvious that none of the above arguments, apart perhaps from (1),
challenges the thesis put forward in this book about the present neoliberal
internationalization of the market economy. Clearly, the internationaliza-
tion thesis advanced in this book does not depend on a stateless, borderless
trans-national corporation as globalizes assume. As it was argued above, a
national base is still very useful to the trans-national corporations in gaining
advantages against competitors, and this fact is perfectly compatible with
the accelerating marketization of the economy. In fact, the thesis sup-
ported here, as regards the significance of TNCs with respect to inter-
nationalization, is very similar to the argument put forward by Suzan
Strange that 'It is not the phenomenon of the trans-national corporation
that is new but the changed balance between firms working only for a local
or domestic market and those working for a global market and in part
producing in countries other than their original home base." 13

The marketization thesis advanced here does not imply the elimination
of the regulatory role of the state, let alone its physical disappearance at the
political level. What it does imply is the loss of the state's economic
sovereignty in the past quarter of a century or so. In fact, the authors
themselves admit this when they christen as 'radical' even the objective of
full employment in the advanced countries, despite the fact that this used
114

to be the main objective of social democracy throughout the period of the


social-democratic consensus. It is therefore clear that when the authors
argue that 'far from the nation-state being undermined by the processes of
internationalization, these processes strengthen the importance of the
nation state in many ways', what they have in mind is not the social
115

controls in a narrow sense, not even the social controls in the broad sense,
but, mainly, what we called regulatory controls. Their implicit assump-
116

tion is obvious: the reproduction and stability of the market economy and
its offspring, the growth economy, through the 'trickle-down effect' will
help the poorer social groups.
It is noteworthy that even when the authors refer to the possibility of a
'new polycentric version of the mixed economy' for the achievement of
'ambitious' goals (like 'promoting employment') the only condition they
mention for this is 'a highly co-ordinated policy on the part of the
members of the Triad'. However, what the authors do not explain is
117

why the elites controlling the Triad will embark on policies to create a new
global mixed economy. In fact, the only argument they produce to
support this case is the old underconsumptionist thesis, namely, that the
48
T H E M A R K E T ECONOMY

reproduction of the growth economy is not viable in the framework of


high inequality, which inevitably leads to low demand. Thus, the fact
118

that as long as the '40 per cent society' expands its consumption, there is no
problem for the growth economy to reproduce itself- as it has done in the
past — is obviously ignored by the authors. Furthermore, the issue of
whether a mixed economy is possible at all today is ignored by the authors
who presumably feel that all is a matter of persuading the elites of the Triad
(through some form of pressure 'from below') to adopt it!
It should therefore be clear that internationalization, as interpreted in
this book, does not presuppose a 'genuine' global economy, nor the
absence of the Triad. Instead, the economic significance of the Triad is
explicidy acknowledged and the present degree of openness implies that
social controls on the market economies of the Triad itself have to be
homogenized. Since this homogenization, in a competitive framework, is
based on the principle of the 'least common denominator' and given the
present disparity of social controls in the Triad countries, any idea that the
introduction of effective social controls (initiated by the state or the 'civil
society') is still feasible becomes nonsensical.
The study by Hirst and Thompson, starting from an a-historical analysis
of the present world economy, assumes that the present neoliberal inter-
nationalized economy is a conjunctural phenomenon rather than a struc-
tural change and attempts to discard the thesis of 'globalizers' that the
119

market economy today is not governable. However, the fact that the
market economy is governable, in the narrow sense of regulation, is
obvious to everybody, apart perhaps from some extreme 'globalizers'. The
real issue is whether nation-states are still capable, in an internationalized
market economy, of imposing effective social controls to protect man and
nature, or whether instead such controls are not feasible any more either at
the level of the nation-state or even at the level of the economic bloc (EU
or NAFTA). If one accepts the non-feasibility thesis, then the possibility
for such controls exists only at the global level. But this is just a theoretical
possibility which ignores the historical dynamic of the market economy
and the resulting political and economic power structures.
As regards the authors' argument that the present degree of openness of
the market economy is not a new development, it should be clear that if
the internationalized market economy of today is seen in its historical
perspective, as this book attempts to do, then, the present degree of
openness is surely not a new phenomenon but merely the latest stage in a
historical process which started two centuries ago. Therefore, the issue is
not whether the neoliberal internationalized economy is more or less open
and integrated than the liberal one but whether it has higher chances of
49
TOWARDS AN INCLUSIVE DEMOCRACY

Table 1.3 Trade openness in advanced capitalist countries


1

1913 1950 1973 1979 1989 1993

France 35.4 21.2 29.0 35.9 38.0 32.7


Germany 35.1 20.1 35.2 43.0 51.2 38.2
Japan 31.4 16.9 18.3 21.9 17.1 14.3
Holland 103.6 70.2 80.1 87.9 95.5 86.1
UK 44.7 36.0 39.3 48.3 48.7 47.3
USA 11.2 7.0 10.5 15.7 16.3 17.1
1. Ratio of merchandise trade (exports and imports combined) to GDP at current prices.

Source: Paul Hirst and Grahame Thompson, Globalization in Question, Table 2.5 (for the years 1913, 1950
and 1973) and estimates based on the World Bank's World Development Report (various years) for the years
1979, 1989 and 1993.

success in creating a self-regulating internationalized market economy


than the first unsuccessful attempt.
Still, although it is true that the present degree of openness is not a new
phenomenon, the evidence produced by Hirst and Thompson to support
the case that the degree of openness today is less than that at the beginning
of the century is highly disputable.
The main indicators the authors use to support the case of less openness
today is the degree of trade and financial openness to the rest of the world.
However, it is only with respect to trade openness that we may use reliable
statistical indicators to measure it. And this type of openness, contrary to
the evidence produced in this study, has increased significantly in the post-
war period. Thus, trade openness has increased in all countries listed in
Table 1.3 (apart from Japan) throughout the post-war period - with a
slight decrease in the 1990s as a result of the recession in the major capitalist
countries. Furthermore, trade openness in 1989 was significantly higher in
four major trading countries (USA, Germany, UK and France) compared
to 1913. As these four countries account for about three-quarters of the
total trade in the six countries listed, it is obvious that the claim by Hirst
and Thompson that there was a greater international openness in 1913
than today (a claim which, curiously, is based on data up to 1973) is
120

hardly supported by the facts. On the other hand, as regards financial


openness, which, according to the data provided by the study, has
decreased today compared to 1913, one may raise serious doubts about the
statistical measure used for this purpose, which in the case of the country
with the major reserve currency, the USA, yields nonsensical results. 121

Withering away the nation-state?


As was argued earlier, the nation-state, contrary to the claims of the
'globalizers', still has a significant role to play in the neoliberal inter-
50
T H E M A R K E T ECONOMY

nationalized economy. However, this role does not involve any more the
enforcement of social controls to protect society from the market. The
state's role today is exclusively related to securing the reproduction of the
market economy through its monopoly of violence and to creating the
stable framework for the efficient functioning of the markets. So, in the
same way that in the tint phase of marketization, when the market
economy was basically national, the nation-state was assigned the role of
enforcing - through its monopoly of violence - the market rules, in
today's internationalized market economy this role is assigned to the state
as well as to international organizations like NATO, a capitalist controlled
UN, etc. A clear indication of the new world order and the means it uses
to enforce the rules of the internationalized market economy was given by
the Gulf War. 122

Thus, in the neoliberal internationalized economy the old Westphalian


system of sovereign nation-states is replaced by a multi-level system of
political-economic entities: micro-regions, traditional states and macro-
regions with institutions of greater or lesser functional scope and formal
authority and with world cities becoming the keyboards of the global
economy. Therefore, the crucial choice today is not, as in the past,
123

internationalism versus nationalism. The real question is what form of


association among peoples can provide the institutional framework for
political, economic, social and cultural autonomy. The European case
provides a very interesting example of the emerging trends in the present
internationalized market economy.
In Eastern Europe, where the marketization process was violently
interrupted by the advent of 'actually existing socialism', the state plays
today the same role that it played in Western Europe in the past century,
when it was involved in the process of establishing the system of free
markets. Under these conditions, the role of the nation-state is critical and
this fact could be a significant factor in explaining the much stronger
influence of nationalism in these countries, particularly in Russia.
In Western Europe, there is a movement towards a federal supra-
national state, which reflects the fact that the core EU countries have
already entered the highest phase of the marketization process. The reality
is that Western Europe is in a transitional period, which is, however,
qualitatively different from that in the East. The present political conflicts
with respect to the future organization of European integration arise out of
the fundamental contradiction indicated by the fact that the economic
structure of each nation-state has already been internationalized, whereas
the political structure, formally at least, still bears the hallmarks of a nation-
state. The main proposals for the European integration, excluding simple
51
TOWARDS AN INCLUSIVE DEMOCRACY

variations of these proposals, like the mainstream Green proposal for a


'Europe of regions', may be classified as follows:
(a) The proposal for a commonwealth of nation-states. This is
supported by the European right wing, from the extreme nationalists
of Le Pen in France to the Thatcherite nationalists in Britain. Their
aim is the continuation of the nation-state within the framework of a
bigger 'domestic' market. The supporters of this proposal are ob-
viously unable to realize that today's transition to a new phase in the
marketization process has created a fundamental incompatibility
between the political structure of the nation-state, which character-
ized earlier phases of the marketization process, and the present
internationalized economic structure.
(b) The proposal for a confederation of socialist states. This is
supported by socialists who have remained outside the 'modernized'
Left and still see that the old socialist ideal of social justice is com-
pletely incompatible with the institutional framework of the newly
emerging Europe. According to this view under today's conditions
124

of internationalization, a confederation of states, in other words a


form of loose concentration of political power, is the only form of
unification that allows for the continuity, at the European level, of the
welfare state and the commitment to full employment, without
sacrificing national autonomy. Still, this proposal does not take into
account the historical evidence, which conclusively shows that the
attempt to concentrate political power, in order to reduce the market
concentration of economic power (social democracy in the West) or
eliminate it altogether (actually existing socialism in the East), has
proved to be futile and totalitarian, respectively. In other words, those
making this proposal cannot see that the response to the concentration
of economic power is not a matching concentration of political power
but a radical dispersion of both. Also, as this proposal identifies growth
with Progress, it does not take into account the interdependence
between the concentration of economic power and growth, which
has led to the present rupture of society and Nature.
(c) The proposal for a European federation. This is supported by the
political representatives of the neoliberal consensus, that is, by the
liberal and social-democratic parties. Their aim is the federation of the
present states and the concentration of political and economic power
into the hands of federal organs (the European Commission, Euro-
pean Parliament, European Central Bank and so on). Although this
proposal is more realistic than the commonwealth proposal, it should
be stressed that it fully adopts the 'grow-or-die' dynamic of the
52
T H E M A R K E T ECONOMY

market economy. In fact, the only aim of the liberals supporting this
proposal is to create a political structure which is compatible with the
internationalized economic structure — in other words, to create the
best possible conditions for the cut-throat competition with the other
economic blocs. On the other hand, social democrats (and those
mainstream Greens who support this proposal), see in the federation
the development of a kind of international statism, a European civil
society that will protect society from the market. However, the same
reasons which led to the failure of statism are bound to lead to the
failure of the proposed international statism as well. The institutional
framework that is being established by the Single Market Act and the
Maastricht Treaty clearly incorporates all the fundamental principles
of the neoliberal consensus. Therefore, the market dynamic assigns
125

an obviously utopian character to the social-democratic rhetoric on


the civil society.

In view of the resistance to the proposal for a federal Europe and the
practical difficulties involved in meeting the convergence criteria of the
Maastricht Treaty it is possible that in the end the members of the EU may
not adopt the full federalist solution and may opt instead for a compromise
between proposals (a) and (c) above. It is therefore possible that at least in
the short to medium term an institutional framework may be adopted
which will semi-internationalize the European political structure to make
it more compatible with its internationalized economic structure.

Is this the end of politics (as we know it)?


The trend towards the accelerating internationalization of the market
economy has already led to a debate about the future of politics and
democracy. Those who take for granted the present institutional frame-
work of the market economy and liberal 'democracy' are divided as
regards their reading of future trends. On the one hand, there are those
who support the view that the present trends, in the long run, lead to the
end not only of the nation-state but also of 'politics' and 'democracy', as
these terms are defined within the existing institutional framework. On 126

the other hand, there are those in the 'Left' who, as we saw above, attempt
to put a case that the nation-state is still the most appropriate engine for the
reproduction of the growth economy and that the argument about
globalization is hugely overstated. 127

The supporters of the 'end of politics' thesis argue that the natural place
for the general good, the political sphere, on which liberal democracy has
rested, disappears in the present age of the networks. Politics, far from
being the organizing principle of life, appears as 'a secondary activity, if not
53
TOWARDS AN INCLUSIVE DEMOCRACY

an artificial construct, poorly suited to the resolution of the practical


problems of the modern world'. This is because we have entered a
128

period in which 'the gulf between the nation as a locus of identity and the
nation as a locus of power is formidable'. Thus, the present period leads
129

to an 'imperial age' in the double sense that it describes a world which is at


once unified and without a centre and, also, in the sense that the new
age
is succeeding the nation-state as the Roman empire succeeded the Roman
republic: the society of men has become too vast to form a political entity. Its
citizens constitute less and less of an entity capable of expressing a collective
sovereignty; they are mere juridical subjects, holders of rights and subjected to
obligations, in an abstract space whose territorial boundaries have become
increasingly vague. 130

I would have no difficulty in agreeing with the above thesis about the
forthcoming end of 'politics' and 'democracy', provided, however, that
these terms are meant to represent the present statecraft and liberal
oligarchy which today pass for politics and democracy respectively. As I
argue in Chapter 5, today's 'politics' and 'democracy' represent a flagrant
distortion of the real meaning of these terms and are indeed in the process
of being phased out, if not in form, at least in content. Just as in the past the
'nationalization' of the market led to the death of the communities, the
free towns and their federations, one may reasonably expect that the
internationalization of the market will lead to the death of nation-states
and national politics. In fact, even if the present political institutions
survive, in the future they will be devoid of any real content, remnants of
the past, constituting a symbolic formality similar to the monarchies still
existing in some Scandinavian countries.
But, the fact that one may agree with the hypothesis about the end of
the nation-state and the consequent end of politics and democracy in their
current meanings does not imply that s/he will have to agree also with the
conclusions of the supporters of this hypothesis. In other words, although
it is obvious that within the new institutional framework no meaningful
politics and democracy is possible, this does not mean politics and
democracy themselves are superfluous. What is obviously superfluous is
the institutional framework which, however, both the supporters of the
nation-state and those assuming its end take for granted!
Thus, Jean-Marie Guehenno, after criticizing any kind of political
structure which obeys a territorial principle, including the federal form,
proposes the 'building of "virtual communities" that will liberate us from
the constraints of geography, and from the traditional political structures
that have for so long framed our actions'. But, one may counter-argue,
131

54
T H E M A R K E T ECONOMY

no real politics and democracy are possible unless they are defined within
a specific territory which, as will be shown in Chapter 6, has to be the area
defined by the confederation of geographically defined communities. This
does not mean localism and a return to primitive ways of living. What it
does mean is the creation of confederations of autonomous regions, at the
national, the continental and the planetary levels. This proposal starts from
the belief that the only way to secure social and individual autonomy, at
the political, economic, social and cultural levels, is by reintegrating
society and economy, in other words, by creating institutions that would
support an inclusive democracy (see Chapters 6 and 7).
What differentiates the above proposal for a confederation of regions
from the usual Green proposal for a 'Europe of regions', or from the
ecosocialist proposal of 'autonomous regions within a unified European
continent' is not that it assumes away the nation-state but rather that it
132

assumes away the institutional framework which inevitably leads to the


separation of the polity from the economy and the consequent concentra-
tion of power in the hands of various elites: the market economy and
liberal democracy.
The very fact that, at present, some varieties of the confederal solution
attract several 'identity movements' in Western Europe (from the Flemish
to the Lombards and from the Scots to the Catalans) is not, of course,
accidental. Despite the fact that these movements see the confederal
solution as the best means to preserve their cultural identity, yet, they also
express, in a distorted way, the demand for individual and social autonomy.
The distortion arises from the fact that the marketization of society has
undermined community values which historically marked the essence of
communities (reciprocity, solidarity, co-operation) in favour of market
values (competition, individualism). As a result, the demand for cultural
autonomy is not founded today on community values but, instead, on
market values, namely, values that encourage tensions and conflicts with
other cultural communities. In this connection, the current neoracist
explosion in Europe is directly relevant to the effectual undermining of
community values by neoliberalism, as well as to the growing inequality
and poverty following the rise of the neoliberal consensus.
The establishment of an inclusive democracy does not imply the
automatic disappearance of cultural tensions, which could be expected to
continue for a long period of time after the establishment of such a society.
Still, one could reasonably assume that a society aiming at the elimination
of the concentration of power will involve a significant qualitative change
in the relations between communities, similar to the change to be
expected in the relationships between individuals - a change that should be
conducive to the minimization of cultural tensions.

55
TOWARDS AN INCLUSIVE DEMOCRACY

In conclusion, the establishment of the market economy and a statist


form of 'democracy' has led to the demeaning and inevitable superfluity of
both politics and democracy, as we know them. Furthermore, the estab-
lishment of the market economy has led to the emergence of a growth
economy which, as we shall see in the next three chapters, is in a state of
crisis in the North as well as in the South.

Notes
1. See, e.g., Immanuel Wallerstein, The Capitalist World Economy (Cambridge,
Massachusetts: Cambridge University Press, 1979), Ch. 1.
2. For a recent example, see Robert Pollin, 'Financial structures and egalitarian
economic policy', New Left Review, No. 214 (Nov.-Dec. 1995).
3. Karl Polanyi, The Great Transformation, the Political and Economic Origins of Our
Time (Boston: Beacon Press, 1944/1957), pp. 43-4.
4. Polanyi, The Great Transfomiation, pp. 55-6.
5. Petr Kropotkin, Selected Writings on Anarchism and Revolution (Cambridge,
MA, and London: Massachusetts Institute of Technology, 1970), p. 231.
6. Polanyi, The Great Transfonnation, p. 71.
7. R.H. Lowie, quoted in Polanyi, The Great Transfonnation, p. 270.
8. For anthropological evidence, see Polanyi, The Great Transfonnation,
pp. 274-6.
9. Henri Pirenne, Medieval Cities, quoted in Polanyi, The Great Transfonnation,
p. 275.
10. Karl Marx and Friedrich Engels, Selected Works (Moscow: Progress
Publishers, 1968), p. 293.
11. Murray Bookchin, Urbanization Without Cities (Montreal: Black Rose Press,
1992), p. 156.
12. Bookchin, Urbanization Without Cities, pp. 131-2.
13. Ernest Barker, quoted in April Carter, The Political Theory of Anarchism
(London: Routledge, 1971), p. 30.
14. Polanyi, The Great Transfonnation, p. 57.
15. Bookchin, Urbanization Without Cities, p. 201.
16. Bookchin, Urbanization Without Cities, p. 146.
17. Polanyi, The Great Transfomiation, pp. 63-5.
18. Kropotkin, Selected Writings, pp. 245-7.
19. Kropotkin, Selected Writings, pp. 246-53.
20. Polanyi, The Great Transfonnation, pp. 41-2, 75.
21. Polanyi, The Great Transfonnation, p. 163.
22. K. Smith, Free is Cheaper (Gloucester: The John Ball Press, 1988) quoted in
David Pepper, Modern Environmentalism (London: Routledge, 1996)
p. 302.
23. The 'logic of growth' has been adequately analysed from both the liberal and
the Marxist perspectives. For further analysis from the ecological standpoint,
see, e.g., Michael Jacobs, The Green Economy (London: Pluto Press, 1991),
pp. 3-49. Also, the chapter entitled 'Why capitalism needs growth' in
Richard Douthwaite's book is useful, despite the deep ecology approach that
it adopts; Richard Douthwaite, The Growth Illusion (Devon, UK: Re-
surgence, 1992), pp. 18-32.
24. Henry Teune, Growth (London: Sage Publications, 1988), p. 13.

56
T H E M A R K E T ECONOMY

25. Polanyi, The Great Transformation, p. 71.


26. Karl Marx, A Contribution to the Critique of Political Economy (London:
Lawrence & Wishart, 1971), p. 21.
27. A.G. Kenwood and A.L. Lougheed, The Growth of the International Economy,
1820-1980 (London: George Allen & Unwin, 1983), p. 74.
28. Kenwood and Lougheed, The Growth of the International Economy, pp.
79-80.
29. Kenwood and Lougheed, The Growth of the International Economy, p. 40.
30. Kenwood and Lougheed, The Growth of the International Economy, Table 6.
31. Kenwood and Lougheed, The Growth of the International Economy, p. 143.
32. Kenwood and Lougheed, The Growth of the International Economy, p. 91.
33. Will Hutton, The State We're In (London: Jonathan Cape, 1995), p. 174.
34. Nicholas Barr, The Economics of the Welfare State (London: Weidenfeld &
Nicolson, 1987), Ch. 2.
35. Friedrich Engels, The Role of Force in History (New York: International
Publishers, 1968), pp. 34-5.
36. E. Gellner, Nations and Nationalism (Oxford: Blackwell, 1983), p. 138.
37. Polanyi, The Great Transfonnation, p. 218.
38. Polanyi, The Great Transfonnation. See in particular pp. 233—4.
39. Polanyi, The Great Transfonnation, Ch. 1.
40. Quoted in Victor Argy, The Postwar International Money Crisis (London: Allen
& Unwin, 1981), p. 17.
41. W.L. Goldfrank, 'Fascism and the great transformation', in Kari Polanyi-
Levitt (ed.) The Life and Work of Karl Polanyi (Montreal: Black Rose Press,
1990), p. 90.
42. Kenwood and Lougheed, The Growth of the International Economy, pp.
185-6.
43. Michael Bleaney, The Rise and Fall of Keynesian Economics (London:
Macmillan, 1985), p. 66.
44. Bleaney, The Rise and Fall of Keynesian Economics, pp. 41-52.
45. Bleaney, The Rise and Fall of Keynesian Economics, p. 75.
46. Polanyi, The Great Transfonnation, p. 245.
47. UK, Social Insurance and Allied Services (The Beveridge Report), Cmd. 6404
(London: HMSO, 1942).
48. A. Maddison, Phases of Capitalist Development (London: Oxford University
Press, 1982), p. 91.
49. For a discussion of the relevant evidence, see Bleaney, The Rise and Fall of
Keynesian Economics, Ch. 4.
50. Andrew Glynn, 'Social democracy and full employment', New Left Review,
No. 211 (May/June 1995), Table 1.
51. See R. Matthews, 'Why has Britain full employment since the war?',
Economic Journal, Vol. 78, No. 3 (1968).
52. Bleaney, The Rise and Fall of Keynesian Economics, p. 92.
53. Ian Gough, The Political Economy of the Welfare State (London: Macmillan,
1979), Table 5.2, p. 79.
54. Ian Gough, The Political Economy of the Welfare State, Table 5.1, p. 77.
55. David Greenaway, International Trade Policy: From Tariffs to the New Protection-
ism (London: Macmillan, 1983), p. 153.
56. Philip Armstrong et al., Capitalism Since World War II (London: Fontana,
1984), Table 10.3, p. 215.

57
TOWARDS AN INCLUSIVE DEMOCRACY

57. Andrew Glynn, 'Social democracy and full employment', Table 2.


58. For an excellent description of the gradual lifting of capital controls in Britain
under market pressure, see Will Hutton, The State We're In, Ch. 3.
59. See A.P. Thirlwall, Balance of Payments Theory (London: Macmillan, 1980),
Ch. 11.
60. Andrew Glynn and Bob Sutcliffe, British Capitalism, Workers and the Profits
Squeeze (Harmondsworth: Penguin, 1972), Table F. 1, p. 260.
61. Philip Armstrong et al, Capitalism Since World War II, Table 11.10, p. 260.
62. Philip Armstrong et al., Capitalism Since World War II, p. 246.
63. In Britain, for instance, total state revenue as a percentage of the GNP
increased by 9 per cent between 1951 and 1975, whereas the corresponding
figure for total state expenditures increased by 29 per cent in the same period;
Ian Gough, The Political Economy of the Welfare State, Table 5.1, p. 77.
64. Andrew Glynn, 'Social democracy and full employment', Table 1.
65. Nick Bosanquet, After the New Right (London: Heinemann, 1983), p. 126.
66. See Yiannis Voulgaris, Liberalism, Conservatism and the Welfare State,
1973-1990 (Themelio: Athens, 1994) (in Greek).
67. M.J. Crozier, S.P. Huntingdon and J. Watanuki, The Crisis of Democracy:
Report on the Governability of Democracies to the Trilateral Commission (New
York: New York University Press, 1975).
68. Will Hutton, The State We're In, p. 103.
69. Philip Armstrong et al., Capitalism Since World War II, Table 14.1.
70. OECD, Economic Outlook, No. 57, 1995; and European Commission,
European Economy, No. 59, 1995.
71. European Commission, Eurostatistics, November 1995; OECD, Economic
Outlook, No. 58, December 1995.
72. Hazel Henderson, Resurgence (May-June 1993), pp. 10-14.
73. Eric Helleiner, 'From Bretton Woods to global finance: a world turned
upside down' in Richard Stubbs and Geoffrey R.D. Underhill, Political
Economy and the Changing Global Order (London: Macmillan, 1994).
74. Christopher Johnson, The Economy Under Mrs. Thatcher, 1979-1990
(London: Penguin, 1991) p. 168.
75. Johnson, The Economy Under Mrs. Thatcher. Calculations based on Table 27
data.
76. Andrew Glynn, 'Social democracy and full employment', Table 1.
77. International Labor Organization (ILO), Yearbook of Labor Statistics (Geneva:
ILO, various years); and Frank Blackaby (ed.) De-Industrialization (London:
Heinemann, 1979), Table 10.2.
78. Western, 'Union decline in 18 advanced capitalist countries', quoted by
Frances Fox Piven 'Is it global economics or neo-laissez-faire?', New Left
Review, No. 213 (Sept.-Oct. 1995).
79. Will Hutton, The State We're In, p. 92.
80. Nick Bosanquet, After the New Right, p. 126.
81. Bob Jessop et al., 'Popular capitalism, flexible accumulation and left strategy',
New Left Review (Sept.-Oct. 1987).
82. Will Hutton, The State We're In, p. 106.
83. Alissa Goodman and Steven Webb, For Richer, For Poorer (London: Institute
of Fiscal Studies, 1994), Figure 2.3.
84. Five million Americans live in barbed wire enclosures with their own private
police and security arrangements (BBC Panorama 29 Jan. 1996).

58
T H E M A R K E T ECONOMY

85. John Kenneth Galbraith, The Culture of Contentment (London: Penguin,


1993), p. 15.
86. Will Hutton, The State We're In, p. 108.
87. Galbraith, The Culture of Contentment, p. 15.
88. World Bank, World Development Report 1995, Table 30; Goodman and
Webb, For Richer, For Poorer.
89. The data about the film industry come from Film and Television Handbook
1993 (London: British Film Institute, 1993), Tables 14, 16, 38.
90. As K. Gouliamos, a Canada-based professor on mass media, stresses, in the
Athens weekly To Vema (9 Feb. 1992).
91. World Bank, World Development Report 1995, Tables 2, 13. (See Table
1.1.)
92. World Bank, World Development Report 1994, Table 9.
93. World Bank, World Development Report 1995, Table 13.
94. Import penetration in France, Germany, Italy, UK and Sweden has
increased from 16 per cent in the early 1970s to 25.7 per cent in 1985-90;
Andrew Glynn, 'Social democracy and full employment', Table 2.
95. Paul Hirst and Grahame Thompson, Globalization in Question (Cambridge:
Polity Press, 1996), pp. 54-5.
96. UN-TCMD, World Investment Report, 1993.
97. The Guardian (7 March 1995).
98. Noam Chomsky, 'Rollback I V , Ζ Magazine (May 1995).
99. Hirst and Thompson, Globalization in Question, p. 51.
100. There was a tenfold increase in international lending between the 1970s and
the 1980s: from about S96 billion in 1976-80 to S819 billion in 1993, Hint
and Thompson, Globalization in Question, Table 2.9.
101. Foreign penetration of national central government bond markets in ad­
vanced capitalist countries has increased by 50 per cent in the last decade
(from 10 per cent in 1983 to 15 per cent in 1989); Hirst and Thompson,
Globalization in Question, Table 2.11.
102. Andrew Glynn, 'Social democracy and full employment', p. 41.
103. Will Hutton, The State We're In, p. 61.
104. Eurostat, A Social Portrait of Europe (Luxembourg: Statistical Office of the
European Communities, 1991), Table 6.13, p. 72.
105. A very recent comparison of the labour costs for producing a standard basket
of goods with $100 shows that the labour cost in peripheral countries like
Greece and Portugal is S50 versus $85 in Germany and Denmark; OECD/
The Observer (10/9/95).
106. Eurostat, Basic Statistics of the Community (Luxembourg: Statistical Office of
the European Communities, 1992), Tables 2.12-2.19, pp. 56-65.
107. See, for instance, Mica Panic, European Monetary Union (London: St
Martin's Press, 1993).
108. Polanyi, The Great Transformation, p. 29.
109. Richard Stubbs and Geoffrey R.D. Underbill, 'Global issues in historical
perspective' in Political Economy and the Changing Global Order (London:
Macmillan, 1994), p. 156.
110. UN, Development Report, 1992.
111. Hirst and Thompson, Globalization in Question.
112. Hirst and Thompson, Globalization in Question, p. 3.
113. Suzan Strange, 'Rethinking structural change in the international political

59
TOWARDS AN INCLUSIVE DEMOCRACY

economy: states, firms and diplomacy' in Stubbs and Underhill, Political


Economy and the Changing Global Order, p. 104.
114. Hirst and Thompson, Globalization in Question, p. 6.
115. Hirst and Thompson, Globalization in Question, p. 17.
116. This becomes obvious from statements like the following: 'National govern­
ments have not proved powerless in the face of an overwhelming "global­
ization" of international finance. Indeed, they have joined together to
organize an effective supervision of the new situation. This remains never­
theless the limited supervision of a market-led international economy.
Regulation does not attempt to alter price fixing by markets in the direc­
tion of financial flows', Hirst and Thompson, Globalization in Question,
pp. 134-5.
117. Hirst and Thompson, Globalization in Question, p. 152.
118. Hirst and Thompson, Globalization in Question, p. 163.
119. Hirst and Thompson, Globalization in Question, p. 15.
120. Hirst and Thompson, Globalization in Question, p. 27.
121. The statistical measure used by Hirst and Thompson (current account
balance to GDP) is shown to be an obviously inappropriate measure of
financial openness in the US case. The US current account surplus was
reduced drastically from $32.3 billion in 1960-67 to less than $5 billion in
1968-81 (Phillip Armstrong et al, Capitalism Since World War II (London:
Fontana, 1984), Tables 10.7, 12.2 16.6). This should mean a corresponding
decrease in the US's capital outflow and degree of financial openness. Yet,
the outflow of direct investment from the USA to other advanced capitalist
countries increased from 3.4 per cent of US total investment in the period
1960-69 to 4.4 per cent in 1970-79 (Grazia Ietto-Gillies, 'Some indicators of
multinational domination of national economies', International Review of
Applied Economics, Vol. 3, No. 1, 1989, Table 1) indicating exactly the
opposite! The reason is obvious. The USA, as a country with a major reserve
currency, does not depend on current account surpluses to finance its
investment abroad - as non-reserve countries have to do. Therefore, the
current account balance to GDP ratio cannot be used as a measure of financial
openness in the case of a reserve-currency country like the USA, despite the
country's enormous financial significance.
122. See Takis Fotopoulos, The Gulf War: The First Battle in the North-South
Conflict (Athens: Exantas, 1991) (in Greek).
123. Robert W. Cox, 'Global restructuring: making sense of the changing
international political economy' in Richard Stubbs and Geoffrey R.D.
Underhill, Political Economy and the Changing Global Order, p. 53.
124. See, e.g., Eric Heffer, Ά rallying call for Eurosocialists', Tlie Guardian
(1 Nov. 1990).
125. See also Takis Fotopoulos, The Neoliberal Consensus and the Crisis of the Growth
Economy (Athens: Gordios, 1993), Ch. 12 (in Greek).
126. Jean-Marie Guehenno, The End of the Nation-State (Minneapolis: University
of Minnesota Press, 1995).
127. See, for instance, Robert Wade, Globalization and Its Limits: Tlie Continuing
Economic Importance of Nations and Regions (University of Sussex: Institute of
Development Studies, 1994); Linda Weiss and John Hobson, States and
Economic Development: A Comparative Historical Analysis (Cambridge: Cam-

60
T H E M A R K E T ECONOMY

bridge University Press, 1995); as well as the study by Hirst and Thompson,
Globalization in Question.
128. Jean-Marie Guehenno, The End of the Nation-State, p. 19.
129. Jean-Marie Guehenno, The End of the Nation-State, p. 138.
130. Jean-Marie Guehenno, The End of the Nation-State, p. xii.
131. Jean-Marie Guehenno, The End of the Nation-State, p. 141.
132. Penny Kemp et al, Europe's Green Alternative: A Manifesto for a New World
(London: Greenprint, 1992), p. 42.

61
CHAPTER 2

The Growth Economy and


'Socialist' Statism

The grow-or-die dynamic that was set in motion by the emergence of the
market economy and the initiation of the marketization process, which we
examined in Chapter 1, led to the creation of the modern growth
economy. However, the advent of 'actually existing socialism' during this
century created another type of growth economy in which economic
growth was a deliberate objective rather than the outcome of the dynamics
of the economic system itself. We shall define the growth economy as the
system of economic organization which is geared, either 'objectively' or
deliberately, to the maximization of economic growth. Therefore, the
growth economy, historically, takes the form of either a 'capitalist' growth
economy or a 'socialist' one. In both these versions, including the hybrid
form of social democracy, the end-result is the same — the maximization of
growth - but the means are different. In fact, it is the much lower degree
of compatibility between ends and means in the socialist case than in the
capitalist one which has already led to the eclipse of the socialist growth
economy.
In the first part of this chapter an attempt is made to explain the rise of
the growth economy in terms of the interaction between the dynamics of
the market economy and the 'growth ideology'. Thus, contrary to the
claims made by most currents in the Green movement, I would argue that
it is not the 'growth ideology', in other words the system of values that
emerged since the Industrial Revolution, which is the exclusive or the
main cause of the emergence of the growth economy. The growth
ideology has simply been used to justify 'objectively' the market economy
and its dynamics, which inevitably led to the capitalist growth economy.
In this problematic, concentration of economic power and ecological
destruction are shown to be the inevitable consequences, as well as the
fundamental preconditions, of economic growth. The implication is that
the main issue today cannot be reduced to just a matter of changing our
values, as some radical Greens naively argue, or even condemning eco-

62
THE GROWTH ECONOMY

nomic growth per se. The crucial issue today is how we may create a new
society where institutionalized domination of human being over human
being and the consequent idea of dominating nature is ruled out. The
search for such a system will lead us to the conclusion that it is not just
growth ideology which has to be abandoned but the market economy
itself.
In the second part of the chapter the 'socialist' version of the growth
economy is examined, as well as the prospects of the market economy that
has succeeded it, either of the capitalist type (East Europe) or of the
'socialist' type (China, Vietnam, Laos). In the third part, the collapse of the
social-democratic growth economy in the West is discussed with parti-
cular emphasis given to the decline of social democracy in the countries of
the European Union where it was born. The chapter concludes with a
discussion of the causes of the fall of the 'socialist' growth economy and of
socialist statism in general.

The rise of the growth economy


The two types of growth economy
Marketization and growth, fuelled by competition, constituted, histori-
cally, the two fundamental components of the system of the market
economy, as we saw in Chapter 1. However, whereas the first component,
the marketization process, had divided the intelligentsia of the industrial
era and led to the two large theoretical and political movements, liberalism
and socialism, no similar divide had arisen with respect to the second
component, that is, economic growth. Economic growth became a central
element of the dominant social paradigm (i.e. the system of beliefs, ideas and
the corresponding values, which is associated with the political, economic
and social institutions) in both the capitalist and the 'socialist' versions
of the growth economy. Thus, economic growth became a liberal and
a socialist objective, although it is intrinsically linked to the market
economy and despite the commitment of the ruling elites in the countries
of 'actually existing socialism' to substitute central planning for the
market economy.
The distinction introduced in this book between the capitalist growth
economy and the socialist growth economy is made on the basis of the way
in which economic resources are allocated, and not in order to define the
nature of the respective regimes. This is of particular importance with
respect to the regimes of 'actually existing socialism', which can surely not
be characterized as socialist, even by the standards of classical Marxism. 1

Therefore, in the capitalist growth economy, economic growth and the


basic economic problems (what, how, for whom to produce) are left to the

63
TOWARDS AN INCLUSIVE DEMOCRACY

price mechanism, whereas in the socialist growth economy most of the


corresponding decisions are taken through some form of central planning
mechanism. Using this distinction, under the 'capitalist growth economy'
label, we will classify the growth economies in the West, which mainly
flourished in the post World War II period and took either a social-
democratic form (at the beginning of the period) or the present neoliberal
form. Under the 'socialist growth economy' label, we will classify the pre-
1989 economic structures in the East, namely the countries of 'actually
existing socialism'.
The above distinction is necessary because, although ownership — and
particularly control of the means of production — was only formally social
in the 'socialist' growth economy, the fact that the allocation of resources
was achieved mainly through the central planning rather than the price
mechanism constitutes an important qualitative difference. Thus, whereas
in the capitalist growth economy (and the 'socialist market economy') the
ultimate objective (growth), as well as the intermediate objectives (effi-
ciency, competitiveness) are derived 'from within' the logic and dynamics
of the system itself, in the 'socialist' growth economy, the same objectives
are imposed 'from without', by the political decisions of the party
bureaucrats who control the planning mechanism. In other words, it is
conceivable that a planned economy may pursue different objectives from
those that a market economy does. Although, obviously, a certain amount
of development of productive forces will always be needed so that, at least,
the basic needs of all citizens are satisfied, still, this does not imply a struggle
to maximize growth in competition with the capitalist growth economy
and everything this struggle involves in terms of the need to improve
efficiency. So, whereas in the capitalist case, the growth economy is the
inevitable outcome of the workings of the market economy at the micro-
economic level, in the socialist case, it is simply the selected objective at the
macro-economic level.
However, apart from this basic difference, the two types of growth
economy share many common features and, in particular, two very
important characteristics: concentration of economic power and eco-
logical damage. These characteristics, in turn, follow from the fact that
both versions share the intermediate objective of efficiency. Efficiency is
defined in both systems on the basis of narrow techno-economic criteria of
input minimization/output maximization and not on the basis of the
satisfaction of human needs, which is supposed to be the aim of an
economic system. Therefore, although concentration of economic power
2

in the socialist growth economy was mainly the outcome of the concen-
tration of political power in the hands of the party elites, and not the
outcome of the 'automatic' functioning of the economic system, still, the

64
THE GROWTH ECONOMY

adopted objective to maximize growth and efficiency imposed the need to


use the same methods of mass production in both the East and the West.
Furthermore, given that the concept of economic efficiency, which both
systems share, does not take into account the 'externalities' of the eco-
nomic process and particularly the negative consequences of growth
on the environment, the outcome is today's widespread environmental
damage all over the planet.

The growth economy and the growth ideology


Perhaps a useful way to account for the rise of the growth economy, in
both its capitalist and 'socialist' versions, would be to refer to the inter-
action between the 'objective' and 'subjective' factors which led to its
emergence. The objective factors refer to the grow-or-die dynamic of the
market economy, whereas the subjective factors refer to the role of the
growth ideology. Nevertheless, as I will try to show, objective and
subjective factors did not contribute equally in the emergence of the two
types of the growth economy. Objective factors were particularly im-
portant with respect to the rise and reproduction of the capitalist growth
economy, whereas subjective factors, the growth 'values', played mainly
an ideological role, in the sense of justifying the emerging market econ-
omy. Conversely, subjective factors, in particular the Enlightenment's
identification of Progress with the development of productive forces and
the influence that the Enlightenment ideas had on the rising socialist
movement, played a crucial role with respect to the rise and reproduction
of the 'socialist' growth economy; on the other hand, the objective factors
did not play any role in the emergence of the 'socialist' growth economy
- although they were important with respect to its reproduction.
The growth ideology may simply be defined as the ideology founded on
the social imaginary signification that 'the unlimited growth of production
and of the productive forces is in fact the central objective of human
existence'. The growth ideology has been established for over 200 years,
3

in the wake of the Industrial Revolution and the 'grow-or-die' dynamic


that was set in motion by the market economy. Thus, from Adam Smith 4

to Karl Marx, the fundamental problem was how humankind could, with
3

the help of science and its technological applications, maximize growth. In


fact, Marx was even more emphatic about the importance of rapid growth.
As a recent Marxist study put it:
The Marxist critique of capitalism has often appealed from one economic
rationality to another, from a crisis-ridden growth process to one which would
be crisis-free and therefore more rapid [my emphasis], from an inefficient

65
TOWARDS AN INCLUSIVE DEMOCRACY

and wasteful allocation of productive resources to one which would rest on


more accurate and comprehensive forms of calculation. 6

This ideology has complemented the liberal ideology of the capitalist


growth economy and the socialist ideology of the socialist growth econ-
omy. In this sense the growth ideology has been the ultimate ideological
foundation for both the capitalist and the socialist growth economy,
despite the different ways in which the hierarchical patterns of power
concentration are structured in the two types of growth economy.
Furthermore, the growth ideology has, in a sense, functioned as the
'ideology in the last instance', since it has determined which ideology will
be dominant at the end. This is why the economic failure of the socialist
growth economy (namely, the failure to create a Western-type consumer
society) was the main reason that led to the collapse of this type of growth
economy and to the present predominance of the capitalist growth
economy and its own ideology (liberalism).
The common growth ideology can also account for the fact that both
types of growth economy share a similar environmental degradation.
Thus, to the extent that the present concentration of power cannot be
simply reduced to capitalist production relations, as Marxists contend, to a
similar extent, the ecological crisis itself cannot be merely reduced to
capitalist relations and conditions of production, as eco-Marxists main-
tain. It is, anyway, evident that an analysis of the ecological crisis on the
7

basis of capitalist production relations fails to explain the presence of an


even more serious ecological crisis in the countries of 'actually existing
socialism', despite the absence of capitalist production relations, in the
sense of privately owned means of production. Thus, just as it would be
wrong to attribute the ecological crisis merely to the growth ideology, as
the environmentalists and various realos within the Green movement do,
disregarding the institutional framework of the market economy and the
consequent power relations, it would be equally wrong to impute the crisis
mainly to capitalist production conditions (as eco-Marxists are trying to
do), disregarding the significance of the growth ideology on the theory
and practice of socialist statism.
So, in order to provide an adequate interpretation of the ecological
crisis, we should refer not just to the interplay of capitalist production
relations with conditions of production (as eco-Marxists do), but to the
interplay of ideology with the power relations that result from the concentra-
tion of power in the institutional framework of a hierarchical society.
Historically, as Bookchin rightly points out:
The idea of dominating nature first arose within society as part of its
institutionalisation into gerontocracies . . . and in patriarchies . . . not in any

66
THE GROWTH ECONOMY

endeavour to control 'nature'. Various modes of social institutionalisation,


not modes of organising human labour (so crucial to Marx) were the first
sources of domination . . . hence, domination can be definitely removed only
by resolving problematics that have their origins in hierarchy and status, not
in class and the technological control of nature alone8

One could only add to this that although the idea of dominating nature
is as old as social domination within hierarchical society, the first historical
attempt to dominate nature en masse emerged with the rise of the market
economy and the consequent development of the growth economy.
Therefore, to explain the present ecological crisis we have to begin with
the historical factors which led to the emergence of the hierarchical society
in general, and continue with an examination of the contemporary form of
hierarchical society, in which the elite draws its power mainly from the
concentration of economic power.
In this context, the differentiated institutional framework of the two
types of growth economy (capitalist and socialist) and the common
ideological framework (growth ideology) will be equally important in the
analysis of the objectives of those controlling the growth economy and the
implications of those objectives with respect to the ecological con-
sequences of growth. Thus:
• In the case of the capitalist growth economy, those controlling the
means of production (capital, labour and 'land') have to aim, in the
context of the marketization process, at the minimization of social
controls on the respective markets - either these controls are designed to
protect labour or the environment.
• In the case of the socialist growth economy, central planners are able, in
theory, to take ecological factors into account when making their
planning decisions; in practice, however, this would imply that growth
and efficiency are not maximized, resulting in further lagging behind the
capitalist growth economy.
It is therefore obvious that in both versions of the growth economy, the
built-in logic of the system, which emanates from the objectives to
maximize growth and economic efficiency, leads to either leaving the
environment out of the calculations of the costs of growth, or to a
straightforward attempt to use Nature as an instrument in the pursuit of the
above objectives.

The growth economy and concentration of power


As we saw in Chapter 1, mechanized production under conditions of
private ownership and control of the means of production implies, first,
marketization, as the outcome of the effort of those controlling the market

67
TOWARDS AN INCLUSIVE DEMOCRACY

economy to minimize social controls on the markets and, second, economic


growth, as the outcome of a process which, at the micro-economic level,
involves the pursuit of profit through the continuous improvement of
efficiency (by means of investments into new techniques, methods of
production, products, etc.) and the sales figures. Both orthodox and
Marxist economic theory could be used to show that the maximization of
economic growth and efficiency crucially depend on the further division
of labour, specialization and the expansion of the size of the market. This
is why modern technology has always been designed to maximize econ-
omic efficiency (in the sense defined above) which implies further expan-
sion of the division of labour and the degree of specialization, irrespective
of the broader economic and social implications. Thus, economic growth,
extension of division of labour and exploitation of comparative advantages
imply a departure from the principle of self-reliance. But, this departure
has considerable repercussions at the economic level (unemployment,
poverty, economic crises in market economy), the cultural level (dis-
integration of social ties and values), the ecological level and, naturally, the
general social level (drastic restriction of individual and social auton-
omy).
The inevitable consequence of the pursuit of profit, through maximiza-
tion of efficiency and the size of the market, has been the concentration of
economic power in the hands of the elites that control the economic
process. It can be shown, as it has been confirmed by a recent study, that
'there is a robust positive relationship between industry profitability and
market concentration'. This is an indication that the pursuit of profit by
9

those controlling the market economy does lead to concentration. At an


early stage of marketization, the concentration of economic power was the
outcome of the 'massification' of production, namely, the concentration
of the production process in big production units that secured 'economies
of scale' and economic efficiency. Today, capitalist companies, to survive
competition in the internationalized market economy, have to 'produce
small quantities of high quality, semi-customised goods tailored to niche
markets, thereby displacing economies of scale as the central dynamic of
competition'. Thus, nowadays, the concentration of economic power
10

coincides with a parallel process of 'demassification' of production and


diversification, which is consistent with the requirements of the post-
industrial society and modern technology. However, this 'de-
massification' of production, although it may influence the size of produc-
tion unit, certainly does not affect the degree of concentration of
economic power at the company level. This is indicated, for instance, by
the fact that the top 500 trans-national corporations (TNCs) control today
two-thirds of world trade (40 per cent of it carried out within TNCs) and

68
THE GROWTH ECONOMY

that, excepting South Korea, all of them are headquartered in the


North. 11

Thus, contrary to the view held by classical, as well as some contempo-


rary, anarchists, in their effort to show that there are natural tendencies
12

leading to a decentralized anarchist society (a similar claim is made today


with respect to bio-regionalism by its advocates), it can be shown that
there is a long-term market trend leading to the continual concentration of
economic power, even when this trend is accompanied by a simultaneous
physical decentralization of the production process, as is the case today.
This increasing concentration can be shown at both the inter-country
macro-economic level, and at the inter-company micro-economic level.
At the inter-country level, Kropotkin, on the basis of a declining British
share in world exports, perceived at the end of the last century a con-
tinuous decentralization of manufacturing, leading to what he called a
'consecutive development of nations'. However, with hindsight, we may
13

now see that this consecutive development never materialized and that
today, on the contrary, we see the largest concentration of economic
power on record. As is well known, a historical gap has been created
between the North and the South, since the time the market economy of
the North started penetrating the traditional economies of the South.
About 200 years ago, when the marketization process was just starting in
the North, the average per capita income in the rich countries was only
one-and-a-half times higher than that in poor countries. About 100 years
14

later, in 1900, it was six times higher, and by the time of the importation
of the growth economy into the South in the early 1950s, it was 8.5 times
higher. The gulf has increased dramatically since then, and by 1970 the per
capita income in the North was 13 times higher than in the South. Lately,
15

this gulf has widened even further, as is indicated by the significant rise in
the North's share of world output and exports in the last two decades; thus,
its share of world output increased from about 74 per cent in 1970 to 79
per cent in 1992, whereas its export share increased from 65.5 per cent in
1979 to 75 per cent in 1992. 16

Therefore, the internal reallocation, regarding the export shares of


metropolitan countries noticed by Kropotkin, does not negate the fact that
today wealth, income, production and exports are concentrated in the
hands of less than one-seventh of the world's population. As regards trade
itself, the economic elites of advanced capitalist countries dominate it
directly or indirectly. Thus, the export share of the G7, which stood at
about 52 per cent in 1953, was still about the same in 1993, despite the fact
that a significant part of production by multinationals headquartered in the
North had moved beyond the geographical boundaries of their bases. In 17

general, the 'Triad countries', which make up only 14 per cent of world

69
TOWARDS AN INCLUSIVE DEMOCRACY

population (1990), attracted 75 per cent of foreign direct investment in the


1980s (1980—91), accounted for 70 per cent of world trade and received
about 70 per cent of world income. 18

At the inter-company level, it is not difficult to establish a historical


trend of increasing economic concentration. In Britain for instance, the
top 100 manufacturing firms increased their share of total net output from
16 per cent in 1909 to 24 per cent in 1935, 32 per cent in 1958 and to
around 40 per cent in the 1970s and 1980s. Similar trends can be
19

observed in other metropolitan countries. Furthermore, the fact that the


20

degree of concentration seems to be stabilizing lately is due more to the


recent significant expansion of fragmentation strategies employed by large
firms (multi-plant ownership, subcontracting, franchising, licensing agree-
ments, and so on) rather than to any real slowdown in the concentration
process. The same fragmentation strategies may also explain, at least
21

partly, the growth of small firms in the last decade, although the parallel
expansion of the services sector has played a crucial role in this connection.
Therefore, although it is true that the post-industrial society has brought a
significant degree of diversification in the production process, this by no
means implies a reversal of the trend towards increasing concentration of
economic power. Finally, the huge concentration of investment power in
a small number of capitalist firms is another indication of the degree of
concentration of economic power. Thus, the largest 100 multinational
corporations account for a third of the total foreign direct investment
stock. From this point of view, the various 'futurologists' who talk
22 23

about the world being 'de-massified' (in the sense of dispersion of power),
after the second wave of industrialism and the diversity of the 'third wave'
which is dawning, in fact, play the role of the apologetic of the present
concentration of power.
However, concentration of economic power has not been the prerog-
ative of the capitalist growth economy. A similar concentration took place
in the socialist growth economy. Therefore, the difference between the
two types of growth economy with respect to concentration is simply
reduced to who owns the means of production and how they are allocated
among different uses.
Thus, first, as far as the form of ownership of economic resources is
concerned, both the private-capitalist and the state-socialist forms of
ownership lead to the pursuit of partial interests. This is because, in both
cases, the form of ownership assigns to a minority the right to control the
production process: either directly, through private ownership, which gives
a minority the right to control the means of production in a market
economy, or indirectly, through state ownership, which assigns a similar
right to the bureaucratic elite in control of the planning mechanism in

70
THE GROWTH ECONOMY

'actually existing socialism'. However, whereas in the capitalist growth


economy concentration of economic power is realized through the
workings of the market mechanism, in the socialist growth economy,
concentration of economic power in the hands of the bureaucratic elite
that controls the central plan is a direct result of the concentration of
political power.
Second, as far as the mechanism for resource allocation is concerned,
both the market mechanism and the planning mechanism result in estab-
lishing a few in privileged positions, at the expense of the many. In the
market mechanism, this is brought about automatically through the
unequal distribution of income that results from the mechanism's
functioning, while in central planning this is accomplished through
the institutionalization of various privileges in favour of the bureau-
cratic elite.
Therefore, to the extent that the 'socialist' concentration of power is
'accidental', when socialism takes the form of soviet 'democracy' at the
political level and central planning at the economic level, to a corre-
sponding extent the capitalist concentration of power is accidental when
liberalism takes the form of parliamentary 'democracy' and the market
economy respectively. In both cases, concentration is justified by the
respective ideology, directly in Marxism and indirectly in liberalism. Thus,
in the former, concentration of power is considered necessary in the
'transitional' period to communism, whereas in the latter, as long as it is
'legal', it is not considered to be incompatible with the fundamental liberal
principle of the 'primacy of the individual', even though concentration
negates the principle's universality. It is therefore clear that neither does
'actually existing socialism' lead to the liberation of human beings, nor
does 'actually existing capitalism' affirm the 'primacy of the individual'.
Concentration of economic power does not, of course, constitute a new
phenomenon. In all hierarchical societies, some concentration of wealth
has always accompanied the concentration of political and military power
in the hands of the various elites — a fact usually justified' through a system
of social rules based upon religion. The new element in the growth
economy is the fact that the reproduction of the social system itself, as well
as of the power of the elite controlling it, crucially depends on the
realization of the growth objective which, in turn, is justified' through its
identification with Progress. So, economic growth functions not just as a
fundamental social and economic goal, but also as a basic means to
reproduce the structures of unequal distribution of economic and political
power which characterize the modern hierarchical society, as well as a
central element of the ideology that supports it. Therefore, the hierarchical
society took a new form with the rise of the market economy in the West

71
TOWARDS AN INCLUSIVE DEMOCRACY

and of the planned economy in the East. In this new form, the elite draws
its power not only (as in the past) from the concentration of political,
military or, in general, social power, but, primarily, from the concentra-
tion of economic power, whether this concentration is brought about by
the market mechanism, or through central planning.
However, the fact that the modern hierarchical society relies for its
reproduction on the maximization of economic growth constitutes, also,
its fundamental contradiction. This is not because, as is usually argued, the
continuation of the growth economy has serious environmental implica-
tions, but because the necessary condition for the reproduction of the
growth economy is the concentration of its benefits on a small section of
the world population, i.e. the huge inequality in the distribution of world
income. This is on two counts:
• First, it is simply not physically possible for the wasteful consumption
standards, which are today enjoyed by the '40 per cent societies' in the
North and the elites in the South, to be universalized and enjoyed by the
world population. Thus, as was recently pointed out: 'It seems clear that
the material consumption of industrial people cannot be universalized to
encompass all humans on earth. The required increase in material
production is large. To simply universalize the North's standard of living
now, global industrial production would need to rise 130 times.' It is
24

also noteworthy that even this already untenable goal understates the
problem by not including present growth and the short-term population
growth projections. In this sense, one may argue that the present rapid
25

growth rate in countries like China (the Chinese GDP rose by an


average rate of 9.6 per cent in 1980—93 ) is physically sustainable only
26

if the parallel huge increase in inequality continues.


• Second, a universalized growth economy is not environmentally sus-
tainable, at the present state of technological knowledge and cost of
'environmentally friendly' technologies. In other words, the universal-
ization of such technologies would not be possible, given their cost and
the concentration of world income. Furthermore, it is at least doubtful
whether after the universalization of such technologies their beneficial
impact on the environment will remain the same.
Concentration and ecological disintegration do not simply constitute
consequences of the establishment of the growth economy, but also funda-
mental preconditions for its reproduction. Contrary to the underconsump-
tionist 'civil societarians' who hope that the elites of the Triad, facing the
threat of an inadequate demand because of growing inequality, will be
induced to introduce a world mixed economy, in fact, the opposite is the
27

case. The growth economy in the North not only is not threatened by the

72
THE GROWTH ECONOMY

growing inequality of the present internationalized market economy, but,


instead, depends on it. Thus, just as the production of the growth
economy is not possible without the plundering of nature, its physical
reproduction is equally impossible without the further concentration of
economic power.
In conclusion, it is obvious that the present concentration of economic,
political and social power in the hands of the elites which control the
growth economy is not simply a cultural phenomenon related to the values
established by the industrial revolution, as significant currents within the
ecological movement naively believe. Therefore, the realization of eco-
logical balance is not just a matter of changes in value-systems (abandon-
ment of the growth logic, consumerism, etc.) which would then lead to an
eco-friendly way of living. In fact, the concentration of power constitutes
the inevitable outcome of a historical process that started with the
establishment of hierarchical social structures and the implied ideology of
domination of human over human and Nature and culminated in the last
28

two centuries with the development of the market economy and its by-
product, the growth economy.
The market/growth economy and concentration of economic power
are opposite sides of the same coin. This means that neither the concentra-
tion of economic power nor the ecological implications of the growth
economy are avoidable within the present institutional framework of the
internationalized market/growth economy. But the increase in the con-
centration of economic power leads to the realization that Progress, in the
sense of improvements in welfare through growth, has a necessarily non-
universal character. Therefore, the moment of truth for the present social
system will come when it will be universally acknowledged that the very
existence of the present wasteful consumption standards depends on the
fact that only a small proportion of the world population, now or in the
future, will be able to enjoy them.

The fall of the 'socialist' growth economy in the East


A crucial part of the present multidimensional crisis is the crisis of socialist
statism, namely, the historical tradition that aims at the conquest of state
power, by legal or revolutionary means, as the necessary condition to bring
about radical social change, i.e. as the precondition for employing our
knowledge about nature and society in order to shape the natural environ-
ment and the course of social evolution. The socialist movement that
emerged in nineteenth-century Europe and, of course, the Marxist move-
ment, constituted the material manifestation of this view, which had
become dominant in the wake of the Enlightenment. This view involved
a course of linear (or dialectic) progress into the future. Politics could be

73
TOWARDS AN INCLUSIVE DEMOCRACY

grounded on science, on an effective knowledge, regardless of any col-


lective, creative or self-instituting activity on the part of social individuals.
The socialist statist view mainly flourished in the quarter of a century
following the end of World War I I , as a result of the vast geographic
expansion of the socialist growth economy in East Europe and the
takeover of power by social-democratic parties in West Europe.
Socialist statism, in its two main historical forms, namely 'actually
existing socialism' in the East and social democracy in the West, has
dominated the Left in the past 100 years or so, putting in second place the
alternative form of socialism, libertarian socialism — a product of the
autonomy tradition. Despite the significant differences between the social-
democratic view, which involved the conquest of the bourgeois state in
order to reform it, and the Marxist-Leninist view, which involved the
abolition of the bourgeois state and its reconstitution into a proletarian
state, both views involve a mechanism to achieve radical social change that
implies the concentration of political and economic power. Lenin's 29

proletarian state or 'mini-state', which eventually withers away, involves


a significant degree of concentration of power in the hands of the prole-
tariat that could easily degenerate, as Bakunin had predicted, into a
30

huge concentration of power in the hands of an elite of ex-workers


(avant-garde).
Today, the socialist statist view seems effectively demolished from the
concentrated blows of the New Right and of the now emerging 'civil-
societarian' Left, as well as of the new social movements. The socialist
statist tradition itself is also in deep crisis, as indicated by the two major
developments of the last 15 years: the eclipse of 'actually existing socialism'
in the East and the parallel collapse of social democracy in the West. The
crisis of socialist statism is, of course, understandable, considering that
numerous socialist statist parties succeeded in their aim to seize state
power. Thus, social-democratic movements in the First World, commu-
nist movements in the Second World and various self-styled socialist
national-liberation movements in the Third World seized power, and they
all failed to change the world, at least in accordance with their proclaimed
declarations and expectations. In fact, even the very superstructures that
these movements erected in the post-war period, which gave the im-
pression of some change, have either been pulled down ('actually existing
socialism' in the East) or are in the process of demolition (social democracy
in the West). So, the failure of socialist statism refers to both the form of
socialist statism in the East, which is associated in theory with Marxism and
in practice with absolute state centralization, and to Western social
democracy, that is, the statism which is associated in theory with Key-
74
THE GROWTH ECONOMY

nesianism and in practice with the welfare state and the mixed econ-
omy-
In what follows we shall examine the causes of the failure of socialist
statism and the related forms of growth economy in both the East
('socialist' growth economy) and the West (the social-democratic version
of the capitalist growth economy).

The causes of the fall of the 'socialist' growth economy


Socialist statism, in the form of 'actually existing socialism', did not even
complete a full century of life before disintegrating under the pressure of its
internal contradictions and the blows - mainly indirect — it received from
international capitalism. However, regardless of the overall economic
failure of 'actually existing socialism', it cannot be disputed that this system
had in its record two achievements of major social significance and that it
is exactly these achievements which today, following the rise of liberalism
in these countries, are phased out.
The first achievement was to eliminate the insecurity created by open
unemployment and the resulting marginalization of the individual. This
was achieved, of course, at the expense of widespread 'disguised' un-
employment (overmanning, etc.). But if, to the liberals, disguised un-
employment was a symptom of economic inefficiency, to the socialists it
was just an inevitable consequence of social policy. There is, however, no
doubt that the attempt to disguise open unemployment in this way
contradicted the very logic of the growth economy. This is why the
ongoing full integration of these countries into the internationalized
market economy has guaranteed the abandonment of the state's commit-
ment to full employment — a commitment which had already been
abandoned by Western social democrats. The inevitable result was bound
to be widespread unemployment, as can be shown either through liberal
Keynesian theory (where the free market is shown to be unable to ensure
full employment, except under special circumstances and for a limited
period of time ) or through Marxist theory (where unemployment - the
31

'reserve army of labour' — ensures that capital accumulation does not create
a rising trend for wages ).
32

The second achievement was that the degree of inequality in the


distribution of income was lower in the countries under 'actually existing
socialism' than in Western countries at the same level of development, as
was shown by reliable Western studies. This, despite the considerable
33

inequalities induced by the institutionalized privileges and various econ-


omic benefits enjoyed by the bureaucracy. It is not, therefore, surprising
that the spreading of market mechanisms in these countries has led to a
continually growing inequality. In 1990, according to Boris Saltykov,

75
TOWARDS AN INCLUSIVE DEMOCRACY

Russia's vice-president responsible for education, those in the top 10 per


cent of the social pyramid were three times as rich as the 10 per cent at the
bottom; by 1992 they were ten to eleven times as rich! Furthermore, the
34

prospects for the future look even gloomier, since their state machines will
weaken in proportion to the degree of their further integration into the
internationalized market economy; this implies that the state will be
allowed even fewer degrees of freedom to intervene in order to reduce the
market-generated inequalities.
To give an adequate interpretation of the phenomenon of the collapse
of 'actually existing socialism', it is necessary to outline the causes of its
economic failure. It was precisely the system's economic failure that, on
the one hand, led to the spectacular U-turn of Soviet bureaucracy, which
was expressed by Gorbachev's perestroika, and, on the other, functioned as
the catalyst for the collapse of 'actually existing socialism' in the satellite
countries. Economic failure manifested itself by a significant slowdown in
the development of production forces which led, at the end, to stagnation.
Indicatively, the growth rate of industrial output in the USSR fell from an
average 7 per cent in the 1960s to 4 per cent in the 1970s and to 2 per cent
in the 1980s. Also, the average GNP growth rate fell from 7 per cent in
35

the 1960s to about 5 per cent in the 1970s. At the same time, serious
36

shortages of consumer goods developed and the phenomena of techno-


logical backwardness and low quality of production intensified.
There are three main interpretations of the economic failure of 'actually
existing socialism' which originate in the three main political traditions:
the liberal, autonomist and socialist-statist traditions. For the liberal ap-
proach, the ultimate cause of the failure lies in the attempt to substitute
central planning for the market mechanism. Alternatively, for the autono-
mist approach, the cause of the failure lies in the lack of democracy that
characterized the system. Finally, the socialist-statist approach usually
occupies the middle ground between the other two approaches. Thus, the
right wing of the socialist-statist tradition (social democrats in the West,
perestroika leadership in the East) is closer to the liberal view, while the left
wing (for example, Trotskyists) is closer to the autonomist view.
According to the liberal view, in order to explain the economic
37

inefficiency of 'actually existing socialism', we have to refer to what is


called the system's 'planability', which is a function of the number of
interrelated decisions to be taken during the planning process. This view
maintains that supplanting the market will only lead to the most arbitrary
and inefficient central decisions regarding the allocation of millions of
products. This is so because 'plan-instructions are, so to speak, non-
specific, defining an aggregate total, which may be in tons, roubles, square
metres or whatever. This instruction is clear and binding, and so enterprises

76
THE GROWTH ECONOMY

produce not what the user actually requires, but that assortment which
adds up to required aggregate quantity' — a process which inevitably
38

induces the waste of materials and economic inefficiency.


Furthermore, according to the same view, the greater the multiplicity of
possible alternative products and methods (which is a by-product of
development) the less is the system's planability. In other words, the
system's success at the early stages of development, manifested by the high
growth rates, was a result of extensive development and of the use of
previously unexploited production resources in the expansion of 'heavy
industry'. Thus, in the last instance, this success was due to the fact that
development was still at a very low stage — a fact which can explain the
system's relative success in, for instance, the pre-war USSR or post-war
Bulgaria. When the point was reached, however, that a higher stage of
economic development demanded intensive use of production resources,
through significant increases in productivity, and the production of tech-
nologically more advanced consumer goods, then the need for decentral-
ization (which, to the liberals, can only be effective in a market system)
inevitably arose. This point marked, also, the beginning of the countdown
leading to successive economic crises and the final collapse of the
system.
According to the alternative radical interpretation (reflecting views
grounded on the autonomist tradition ), the basic cause of the system's
39

inefficiency lies in the absence, first, of political democracy and, second, of


democracy at the workplace in the sense of self-management of the
production units. This lack of workers' participation in the decision-
taking process, unavoidably, led to the alienation of direct producers, as a
result of the total absence of work incentives.
The radical interpretation carries a lot of weight because it is true that
the capitalist economic incentives were institutionally absent, whereas the
socialist ideological incentives, which the bureaucratic elite tried to create in
place of the economic ones, were doomed to fail. As regards the economic
incentives, there are two main incentives provided by the capitalist growth
economy: one positive, consumerism, and one negative, unemployment.
Both were absent in the countries under 'actually existing socialism'.
Consumerism was impossible, not only because of the bureaucratization of
the economic process which had created an inefficient consumer goods
sector, but also because these countries had to channel a relatively small
proportion of their economic resources to the production of consumer
goods. Given their lower level of development, compared with the
advanced capitalist countries, this was their only way to cope with the
exorbitant defence expenditures imposed on them by the Cold War.
77
TOWARDS AN INCLUSIVE DEMOCRACY

Furthermore, the right to employment - usually inscribed in the constitu-


tion - not only led to widespread disguised unemployment, but also
reinforced an attitude of 'minimal effort' and passivity. The consequences
were inevitably disastrous, especially with respect to the efficiency of the
information flow which is particularly significant for the adequate func-
tioning of every mechanism of resource allocation.
As regards the ideological incentives (which were used mainly by Stalin
and Mao in their effort to make up for the absent economic incentives),
their failure was inevitable in a system characterized by the fundamental
contradiction between an ideology based upon the principles of equality
and social justice, and the reality of a blatantly unequal distribution of
economic and political power.
The failure of 'actually existing socialism' to achieve the principal aim of
creating an efficient socialist growth economy produced the following
dilemma for the ruling elites: either socialist decentralization or decentral-
ization through the market. The former involved the creation of an
authentic socialist economy, through the institution of new structures for
socialist self-management and a parallel struggle for the establishment of a
new international division of labour based upon the principles of co-
operation and solidarity. The latter involved the creation of a 'socialist'
market economy and a full integration into the internationalized market
economy, which is founded upon the principles of competition and
individualism. The first option would entail the self-negation of the ruling
elites (not to mention their exclusion from access to Western capital, while
many of these countries were in deep debt), as well as the dissolution of the
hierarchical structures they had established. On the other hand, the
adoption of the second option was entirely consistent with the reproduc-
tion (with some changes in form) of the hierarchical structures and of the
elites themselves (including most of their personnel).
Hence, the criteria used in selecting the form of decentralization were
not economic (as presented by Western analysis and politicians), but
political. The discourse used by the protagonists of perestroika, in order to
justify it, was indicative. Thus, according to Alexander Yakovlev, pere- 40

stroika signified the substitution of the theory that universal human values
transcend class interests for Marxist class theory. It is characteristic that
among these 'universal' values the dominant value is considered to be the
mixed economy and free competition!
Once the reformist elites embarked on a strategy to introduce a
'socialist' market economy, the dynamic that was set in motion was bound
to lead to the transcendence not just of the 'socialist' growth economy but
of 'actually existing socialism' itself. The soviet reformist elite in particular,
unlike the Chinese elite, had to accompany the reforms (perestroika) with

78
THE GROWTH ECONOMY

more openness (glasnost) in order to outmanoeuvre the strong hard-liner


military-industrial faction in the establishment which did not wish to see
any significant changes in the status quo. But, more openness gave the
chance to the centrifugal forces, encouraged by the Western elites which
had a vested interest in the restoration of the capitalist growth economy, to
push for the fragmentation of the USSR and the overthrow of 'actually
existing socialism'.

From a 'socialist' growth economy to a market economy


The collapse of the 'socialist' growth economy and its replacement by a
market economy has become universal. From Russia to China and from
Poland to Vietnam, the planned allocation of resources has either eclipsed
or is in the process of doing so. The difference between East Europe and
the Far East is that whereas the socialist growth economy in East Europe is
being replaced by a capitalist market economy, in the Far East it is being
replaced by a kind of 'socialist' market economy, where significant
productive resources are still in state control.

The capitalist market economies in East Europe


In Eastern Europe, after the collapse of the political structures which, apart
from Russia (and partially Yugoslavia and Albania), have been 'imported'
by the Red Army, the new regimes, under the tutelage of the IMF, the
World Bank, etc., embarked on a strategy to dismantle not just the system
of planning in the allocation of resources but also the state ownership of the
productive resources and replace both by a market economy and capitalist
ownership and control.
The new elites that are currently being formed aim to create a new
system of control and privileges based upon private ownership of the
means of production, in place of the old system which was founded on
party power and bureaucratic control. In fact, the new capitalist elites often
consist of the same personnel as the old elites: thus, many members of the
nomenclatura have already taken over the newly privatized companies,
confirming Trotsky's old prediction that bureaucrats can turn into
41

capitalists. This is not surprising given that the ex-bureaucrats and black-
marketeers, together with foreign capitalists, are the only ones able to
command the funds and connections necessary to buy the productive
resources on sale. Furthermore, the strings attached by the international
capitalist organizations to the loans and 'aid' given to these countries
were also designed to reinforce the capitalist market economy being estab-
lished and to preclude any attempt towards a self-managed production
structure.
The future of the market economies now emerging in Eastern Europe

79
TOWARDS AN INCLUSIVE DEMOCRACY

will be determined by whether it will be possible to build a successful


capitalist growth economy in place of the 'socialist' growth economy that
has just collapsed. This depends on two main factors: first, on whether the
mass influx of Western capital, which is still awaited, will actually material-
ize; and second, on whether some, at least, of the trade-flows within the
former Eastern bloc, which are presently being dismantled in the process of
integrating the bloc countries into the internationalized market economy,
will be re-established. If these aims are generally accomplished, then the
negative effects of marketization (drastic increase in unemployment,
widening of inequality, downgrading of social services and so on) may be
largely tolerable, provided that they do not acquire mass proportions.
However, the chances of these aims being achieved are small, although
for some countries in central Europe they are considerably greater. Not
only has the mass influx of Western capital not yet materialized but it seems
all the more doubtful today whether it will ever do so. In the fierce
competition among the countries of the 'extended' South to attract
foreign investment, vast China possesses considerable comparative advan-
tages (lower wages, political 'stability', and so on). The existing evidence
up to now supports this hypothesis. The entire East European region has
attracted very small flows of foreign investment, without macro-economic
significance. In 1992 alone, China attracted more foreign direct invest-
ment than the whole of the former Soviet bloc attracted between 1989 and
1993. Furthermore, the flow of foreign investment in the region not only
42

has been small but, in effect, was directed to buying the state industries
which, with the collapse of the currencies in the region - particularly the
rouble — were sold 'for a song'. In Hungary and Poland, for instance, the
overwhelming bulk of privatizations (some 55,000 enterprises by the end
of 1993) have gone to foreign buyers.
As regards the possibility of re-establishing trade links within the former
Eastern bloc, the chances of these links acquiring in the future a quantita-
tive significance similar to the old ones are almost nil. Particularly so, given
Sachs's plan's core objective of breaking-up the Comecon region. The
43

parallel 'encouragement' (by the 'G7') of the revival of economic activity,


on the basis of trade-led growth directed towards Western Europe, 44

further contributed to the break-up of the Comecon links. An immediate


result of the Comecon break-up was that the traditional EU trade deficit
with the region turned into a surplus. 45

It may, therefore, safely be predicted that the more developed of these


countries (the Czech republic, the Republic of Slovakia, Hungary, Po-
land) will occupy a position in the semi-periphery of the internationalized
market economy, while the remaining ones will constitute its periphery.
So, the neoliberal policies imposed today by major Western capitalist

80
THE GROWTH ECONOMY

countries, combined with the absence of the preconditions for the


development of a strong domestic industry and technology, practically
guarantee the 'Latin-Americanization' of Eastern Europe. Not surpris-
ingly, a recent study found that, on current trends, most of the region will
not regain their 1988 (pre-market economy) living standards even by the
year 2010! 46

In regard to Russia, in particular, its present total integration in the


internationalized market economy completes a process already begun in
the previous century and abruptly interrupted by the rise of the Bolshevist
regime to power. About 100 years ago, the tsarist reformist Sergei Witte
complained that Russia was a country that exported raw materials and
imported finished goods, that is, a country in the capitalist periphery.
Today, the country returns to its former position, with regard to both the
structure of production and, subsequently, the structure of its trade.
As far as production is concerned, the initiative for the required
restructuring of the manufacturing sector, that would have created the
conditions for survival in the competition with Western firms, should have
come either from the managers of public corporations (supported by the
state) or from private - domestic and foreign - capital. However, the first
possibility was, from the start, ruled out by the Western financial backers
of the reforms. The international organizations took pains to ensure that
every single dollar of help to Russia would be 'linked' to market reforms. 47

Simultaneously, they pressed for the drastic reduction of public deficits and
for the privatization of state companies which, following the dramatic
devaluation of the rouble, offered particularly lucrative opportunities for
Western capital. However, Western capital showed no particular desire to
invest in Russian manufacturing. On the contrary, following its usual
practice in the periphery, it turned to investments in the particularly
profitable - due to the rich natural resources - energy (oil, gas) and timber
sectors, as well as the mining of raw materials. The result has been a
48

continual decrease in production, industrial production in particular.


With regard to trade, the completion of Russia's integration into the
internationalized market economy has resulted in the collapse of the
traditional commercial links with the other countries of Eastern Europe
and the former republics in the Soviet Union. According to M. Kaser, a
distinguished sovietologist at Oxford University, in 1988, the final year of
the Central Plan, Russian trade with the other republics constituted four-
fifths of the total trade, representing 27 per cent of the Russian GNP. 49

The fragmentation of Comecon-region trade had a disastrous impact on


industrial production as even an OECD report admitted: 'According to
some calculations, this volume effect alone can explain most of the fall in
output in Hungary and the former CFSR and about one-third of the

81
TOWARDS AN INCLUSIVE DEMOCRACY

decline in Poland.' Today, trade with the other republics has collapsed,
50

and Russia imports final products (essentially luxury consumer goods for
the new elite) and exports raw materials, exactly as it did 100 years ago.
At the same time, the West, through various international organiza-
tions, imposes an increasingly stricter 'austerity' in order to 'stabilize' the
Russian economy in its new place in the international division of labour.
No wonder Sachs's shock therapy became famous for its three 'izations':
liberalization, privatization, and stabilization. The effect of the above
policies was a massive slump, which, according to the Russian State
Committee for Statistics — the only reliable official source on the economy
- reached a cumulative fall in industrial output approaching 50 per cent in
the period 1991—93, a decrease even greater than that which occurred in
51

the United States during the Great Depression, in the wake of the 1929
crash! The human cost has been, inevitably, huge. According to a World
Bank study, 37 per cent of the adult population and 46-47 per cent of the
under 15s fell below the poverty line in 1992. Not surprisingly, whereas
52

the world crude death rate has fallen by a quarter between 1970 and 1993,
in Russia it has increased by 44 per cent and almost all of this increase
happened after 1989. This is why even sections of the emerging new
53

elite, which are interested in the development of a domestic manufactur-


ing base, talk about the Latin-Americanization of Russia. Thus, Arkady
Volsky, for instance, president of the Union of Russian Industrialists, states
that Russia cannot possibly have a totally open economy, since only 16 per
cent of its enterprises can withstand international competition. In the
54

same vein, Boris Kagarlitsky, leading cadre of the party of Labour, states
that 'the government's economic policy does not aim to overcome the
crisis but to make it work for the benefit of the new elite, which stands to
profit from the country's Latin-Americanization'. 55

At the political level, the most probable 'scenario' is a long period of


instability which, in the long term, may initiate processes that will enhance
radical and, most likely, extreme nationalist and fascist tendencies. In fact,
the present resurgence of the communist party under Zyuganov expresses
more a rising nationalism and an effort to support 'the "good" — that is -
56

paternalist nomenclature' rather than any attempt to roll back the market
57

economy, which is taken for granted by the reformed 'communists'.


In the meantime, the invasion of consumerism and the regime's
objective inability to satisfy the consumer needs and, in particular, the
expectations of large sections of the population, have led to an explosion of
criminality, alcoholism and drug abuse. Notwithstanding, the trend
favoured today by the rising new elites in Russia and the other Eastern
countries is political liberalization, in the sense of 'democratization'. The
same trend is actively supported by the West. In fact, the policy of

82
THE GROWTH ECONOMY

'democratization' has been advanced by the West since the early 1980s not
only in Eastern Europe but throughout the capitaUst periphery and semi-
periphery, to which the Eastern bloc countries now belong. Thus, Ronald
Reagan, in a speech to the British Parliament in 1981, announced that the
US was about to throw its prestige and resources behind a programme to
strengthen 'democracy throughout the world'. The timing of this
58

announcement was not accidental. The authoritarian regimes in the


periphery could only survive as long as the 'alibi of growth', that is, the
growth ideology, was still credible. However, at the beginning of the
1980s it was already clear that the 'development' that had taken place in the
peripheral countries was based upon totally unstable foundations (mainly
on foreign borrowing), and was unable to create a Western-type growth
economy. At that point, democracy became 'a way of spreading and
sharing responsibility', as B. Cumings aptly commented. In reality
59

therefore, 'democratic participation', which is celebrated today in the


periphery and semi-periphery, is simply participation in misery. The
system of liberal oligarchy now replacing the authoritarian regimes of the
past cannot, by its nature, ensure citizens' true participation in decision-
making — merely their collective apathy. This apathy, however, is today
secured in a much more sophisticated way than in a Stalinist- or Pinochet-
type of regime, which is not capable of creating the illusion of citizen
participation. The average citizen is asked every four to five years to
choose his or her masters, occasionally becomes involved in pressure
groups, rarely rises to the elite itself, while 'by and large he does, and is
expected to, remain relatively passive - in fact, the health of the system
depends on it'. 60

However, the crucial problem that the transplantation of liberal oli-


garchy to the periphery creates is that, whereas the Western liberal
oligarchy is founded on the '40 per cent society', there is no chance, in the
foreseeable future, for the peripheral liberal oligarchy to acquire a similar
basis on which a system of institutionalized apathy could be built.

The 'socialist' market economies in the Far East


The Far Eastern 'socialist' growth economy (China, Vietnam, Laos) is
being replaced not by a capitalist market economy as in Eastern Europe but
by a 'socialist' one, in the sense that an attempt is made to keep most of
industrial production under state control. However, the dynamic of the
market economy that was set in motion by the reforms inevitably leads to
a capitalist market economy in all these countries.
In China, the conversion to a market economy started in 1979. But, in
contrast to the road taken in Eastern Europe, the massive public sector is

83
TOWARDS AN INCLUSIVE DEMOCRACY

still maintained not only in health, education, transport, tele-


communications, banking and foreign trade but also in industry. Thus,
socially owned enterprises (state, collective, etc.) still produce over 85 per
cent of China's industrial output. The obvious aim of the Chinese
61

bureaucracy was to allow as much freedom as possible to the market forces


at the micro-economic level of the state enterprise and keep for themselves
overall control over the macro-economic allocation of resources, through
state ownership and planning. This aim was obviously contradictory and
the dynamics of the market economy at the micro level were bound to
give an expanded role to the market, at the expense of planning, in the
overall allocation of resources. Thus, as a study put it: 'functioning markets
have come into being in Chinese industry and have become increasingly
important in resource allocation . . . the growing importance of the market
has been intimately linked with the decline of the resource allocation of
planning'. 62

The effect of the reforms, in terms of the conventional measures of


'success' of the growth economy, have been significant. The World Bank
a few years ago was celebrating the fact that, as a result of the introduction
of the market economy in China, the average annual growth rate since
1979 has been 8.8 per cent and per capita output has doubled in the period
1977—87. However, it is very doubtful whether even this type of
63

'success' is sustainable, at least within the present institutional framework.


Thus, as regards the state sector, most of the growth in it has not been
'intensive', namely due to improvements in productivity, but extensive,
owing a lot to the huge reserves of surplus labour. Also, as regards the
64

growing private sector, the real engine of growth in it has been the
foreign-invested industrial sector, most of which is concentrated in South-
ern China. Not much analysis is needed to predict that the lower cost
advantages of private enterprises (e.g. their ability to avoid paying any
welfare benefits) will inevitably lead to the victory of private over col-
lective enterprises, and of foreign-owned over local ones, as some studies
also predict. Thus, at the moment, a dual economy has been created in
65

China and a corresponding dual structure of power, with the market


gaining increasing control over the economy, at the expense of the
bureaucracy which has to rely on repression to hold on to power.
The Chinese example is a perfect illustration of the impossibility, as well
as the undesirability, of a 'socialist' market economy. Not only have the
dynamics of it inexorably led to the elimination of the remnants of
'socialism'; they also, in the meantime, have already created the familiar
effects of a market economy. Thus, despite the fact that social ownership
is still the norm, inequality, unemployment and insecurity are now
rampant in China. The fact that market-led investment, mainly foreign, is

84
THE GROWTH ECONOMY

concentrated in the most profitable areas has led to huge disparities within
China which at present are as great as those between Germany and the
poorest countries of Eastern Europe. Also, according to a very recent
66

report, the per capita GDP of China's richest region, the Zhuhai Special
Economic Zone, is now 86 times higher than that in the poorest area,
Qinglong county in Guizhou. 67

As regards unemployment, Chinese government officials estimate that


200 million peasants are presendy without work, and the number is
estimated to rise to 300 million by the year 2000. A huge tidal wave of
68

peasants, estimated at about 140 million (almost a third of the rural


workforce), has already joined the 'blind flow' of migrant workers from
inland farms searching for jobs in the 'booming' eastern seaboard. A report
described graphically the plight of those people:

[T]he 'lucky' few who get a job are easy prey for unscrupulous factory owners
who put profit before safety and force them to work long hours in grimy
sweatshops or fire cracker plants. On average, nearly 500 people die from
industrial accidents in China each week, a dismal record that has attracted
condemnation from the International Labour Organisation and international
trade unions. 69

At the same time, competition between the provinces to attract foreign


firms has led to the creation of export zones where the concessions to
foreign capital have created, as in other Asian capitalist miracles, 'a paradise
built on remorseless exploitation of child labour, forced overtime, govern-
ment strikebreaking and worse'. No wonder death rates are rising,
70

significant environmental problems are emerging and increasing income


inequality is leading to social disruption and unrest. 71

In China, as well as in Vietnam, as Gabriel Kolko points out in a


postscript to his authoritative study of the Vietnam War, 'communist
rulers are attempting to merge capitalist institutions and Leninist justifica-
tions for elite domination'. In both countries, Professor Kolko argues,
72

market-based reforms have created new categories of rich and poor, and
widened the gap between town and country. Vietnam, he concludes, is
quickly becoming a class society in the Western economic sense of the
term.

The collapse of social democracy in the West


The move from social democracy to social liberalism
It is not, however, only 'actually existing socialism' that today has col-
lapsed. Despite the absurd claims by many social democrats that the

85
TOWARDS AN INCLUSIVE DEMOCRACY

collapse of the extreme form of socialist statism in Eastern Europe vindi-


cated social democracy, in fact, the disintegration of the latter and of the
related social-democratic version of the capitalist growth economy is no
less conspicuous.
The main characteristic of the neoliberal consensus is the drastic
alteration of the content of social democracy, that is, the radical shrinking,
not just of statism in general, which we saw in Chapter 1, but of 'socialist'
statism in particular. Thus, the fundamental structures of the neoliberal
consensus are, above all, characterized by the minimization of social-
democratic state interventionism; in other words, the type of inter-
ventionism which marked the post-war period of social-democratic con-
sensus until about the mid-1970s. The central aims of social-democratic
state interventionism were, as we saw in Chapter 1, first, to establish and
maintain full employment; second, to create a comprehensive welfare
state; and third, to achieve a fair distribution of income. The latter was
supposed to be secured not only through the introduction of a 'social
wage' system that was implied by the welfare state, but also through a
progressive personal income tax system that would be used, in combina-
tion with public sector borrowing, to finance the welfare state.
In the event, the pursuit of these aims did have a relative success in
improving the standard of living of the lower income strata, creating the
image of a 'single-nation' society. Thus, at the ideological level, social
democrats were able to claim that they had created a society which secured
some social justice guarantees, without sacrificing every sense of individual
freedom, that is, an 'actually existing capitalism with a human face' to
counterbalance 'actually existing socialism'.
However, this type of socially credible capitalism — contrary to the
claims of ex-Marxist intellectuals who have belatedly defected to social
democracy — is either extinct (the United Kingdom), or is rapidly dis-
appearing (Germany, Sweden, Norway). The abandonment of the state's
commitment to full employment and the subsequent rise in unemploy-
ment and poverty, as well as the crippling of the welfare state, have led to
the present '40 per cent society', which has taken the place of the 'single-
nation' society. Today's social-democratic parties, rather than attempting
to bring about drastic changes in the neoliberal market economy presently
being established, realistically changed their ideology instead. As these
parties therefore bear almost no relation at all to the traditional social-
democratic parties of the 1950-75 period, they should more accurately be
called 'social liberal' rather than social-democratic parties. In fact, the
collapse of social democracy in the last decade or so has taken such
dimensions that an old member of the 'New' Left in desperation asked:
86
THE GROWTH ECONOMY

Once, in the founding years of the Second International, [social democracy]


was dedicated to the overthrow of capitalism. Then, it pursued partial reforms
as gradual steps towards socialism. Finally, it settled for welfare and full
employment within capitalism. If it now accepts a scaling down of one and
giving up of the other, what kind of movement will it change into? 73

This demeaning of the content of social democracy is due, as we have


seen in Chapter 1, to fundamental changes in the structure of the market
economy; changes that hardly permit the degree of statism in which the
old social democracy flourished. Therefore, the substitution of social
liberalism for social democracy is neither conjunctural nor temporary, as
social liberals tend to assume. The present policies aiming at the constant
curtailment of fiscal deficits and social expenditures, the dismantling of the
welfare state and the abandonment of the full employment commitment
are no longer a matter of choice; they are imposed on social liberals by the
present degree of internationalization of the market economy, as it is
expressed in particular by:
• the liberalized commodity markets which imply that growth depends to
a significant extent on the continual improvement of competitiveness.
This has reduced almost to zero the possibility of a state following a
drastically different policy than its competitors on welfare state, employ-
ment, etc. As a recent study put it, today, 'labour standards are brought
back into competition in trans-national markets. Consequently, trade
acts to undermine the Keynesian welfare state and high labour standards
linked to it'.74

• the liberalized capital markets which imply that the mere possibility of
capital flight en masse has, to all intents and purposes, eliminated the
political autonomy of the welfare state. 75

So, under the structural constraints that the present internationalization


of the market economy imposes and the electoral considerations pre-
scribed by the change in class structure we saw in Chapter 1, the policies
of social liberals are now hardly discernible from those of pure neoliberals.
The same story repeats itself everywhere — from Australia, where the
Labour Party had earnestly implemented privatization policies and taken
drastic steps to cut budget deficits, to Sweden, where the social democrats,
even before losing power in 1991, had embarked on a policy leading to the
effective dismantlement of the employment system and the welfare state,
which were the envy of social democrats around the world. Similarly in
Norway 'the single most important goal of Labour's strategy, full employ-
ment, has been abandoned'. 76

Let us consider, however, the case of Sweden in more detail, since it


clearly demonstrates the causes of the collapse of social democracy. In

87
TOWARDS AN INCLUSIVE DEMOCRACY

1990, Sweden's central bank was freed from its commitment to full
employment and the crown was forced to follow the ECU's variations.
The Swedish establishment, acknowledging that competitiveness played
the primary role in economic growth, substituted the fight against inflation
for the fight against unemployment as the main economic target. Within
three years unemployment in Sweden increased more than five times
(from 1.5 per cent in 1990 to 8.2 per cent in 1993). However, long before
the commitment to full employment was abandoned, the institutional
means for the attainment of this goal had already been dismantled. In fact,
the institutional framework had begun to change as early as the mid-1980s,
when the central bank abandoned controls on the other banks, thus
beginning a process of market deregulation, comparable to the one
observed by EU countries. The consequence was that the burden to
control inflation fell exclusively onto the labour unions, which, however,
were unable to press their members for low wages, particularly at a time of
accelerating inflation caused by an uncontrollable bank credit creation.
As a study on the Swedish phenomenon points out, deregulation was
77

the main economic cause that destroyed the Swedish model. When, in the
1930s, Sweden established the statist model, the institutional framework of
regulations and controls regarding the movement of capital, both within
the country (bank borrowing, etc.) and between Sweden and other
countries, was entirely different. Thus, the institutional framework at that
time consisted of strict bank controls, severe foreign exchange regulations
and a government committed to maintain domestic demand at a high
level, in co-ordination with the central bank, which was committed to the
full employment objective. Within this framework, the powerful Swedish
labour unions were in a position to secure 'reasonable' wage raises, that is,
not causing inflation. Today, however, the deregulation of money markets
means that any attempt to base growth on government spending and
budget deficits is doomed to fail, since it leads to speculative capital
movements and currency instability. As a result, the Swedish model of
social democracy has been falling to pieces recently, particularly since the
autumn of 1992 when the neoliberal consensus was formalized. Then,
in the middle of a serious crisis threatening the Swedish crown and
the market economy itself, conservatives and social democrats agreed
on a series of measures leading to a substantial downgrading of the
welfare state.
The theoretical case in favour of social liberalism rests on an assortment
of arguments according to which the present internationalized market
economy is not necessarily incompatible with a 'redefined' social democ-
racy. Some argue, as we saw in Chapter 1, that the nation-state may still
78

play an important role, not only in controlling the activities of nationally

88
THE GROWTH ECONOMY

based multinational corporations, but also - in co-operation with other


governments in the Triad — in controlling international markets. Others, 79

having abandoned the outdated Marxist class analysis, throw away the
baby with the bath water and claim that today we live in a society of
equality no longer characterized by vertical structures, where the govern-
ment itself constitutes just one more organized social group, pursuing its
own narrowly partisan interests! Still others, taking for granted the institu-
tional framework set up by neoliberalism in the past decade (that is, the
drastic enhancement of the market forces and competition, at the expense
of social control on the economy), advance positions that hardly differ, in
their essence, from the pure neoliberal positions. For instance, they reject
the need to socialize the means of production (the British Labour Party in
1995 erased from its constitution the long-standing commitment to the
socialization of the means of production), despite the fact that socialization
has historically constituted a fundamental of socialism. Thus, a social-
democrat sociology professor at the London School of Economics argues
that 'what is of primary importance, is not the form of ownership, but the
quality of control exercised by the state . . . that could ensure both quality
of services and low prices'. In this way, an obvious attempt is being made
80

to evade the basic fact that no form of state control is possible, no matter
how 'sophisticated', if it is in conflict with the fundamental principles of
the market economy and the dynamics of competition.
No form of state control could, for instance, prevent a privatized public
utility enterprise from discontinuing the supply of its services to those
unable to pay. The British privatized water industry is a characteristic
example. Since the privatization of the water companies and the drastic
increase in water charges, there has been a dramatic increase in the
incidence of water disconnections. Thus, between 1991 and 1993, water
disconnections increased by 170 per cent. Disconnections were followed
by a significant spread of disease, causing the reappearance of epidemics
that had disappeared a century ago: cases of dysentery rose from 2756 in
1990 to 9935 in 1991 and 16,960 in 1992! Moreover, whereas the
81

exclusive social control of public utility companies could ensure the


reinvestment of their entire surplus in new technologies that would
guarantee the modernization of their services, in the case of privatized
companies it is taken for granted that a considerable portion of the surplus
is bound for the shareholders' pockets.
Similarly, no form of state control could force the owners of companies
covering basic needs to offer their services at prices affordable to the
underclass, the thousands of unemployed, low-wagers and inactives that
the institutional framework itself creates. In reality, as the British experi-
ence has shown, state control cannot even meet the aims set by social

89
TOWARDS AN INCLUSIVE DEMOCRACY

liberals, in particular low prices, for reasons related to the logic of the
market itself. Thus, a comparative study of telephone charges in 14
82

European countries showed that the privatization of British Telecom has


not benefited individual customers. Britain was the only EU country
where basic phone services were not in the hands of a state monopoly, and,
at the same time, it was the EU country with the highest charges for local
calls, yielding a profit margin of 74 per cent! 83

Finally, social liberals repudiate the universal character of the welfare


state, blaming universality (the principle that social services are offered
to every citizen irrespective of income and need) for the system's
crisis. Indeed, in their effort to support the case against universality, they
84

do not even hesitate to invoke social justice, arguing that the universal
system accentuates social inequalities because the middle classes are in a
better position than the financially weaker - who are in real need - to
benefit from social services (in education, health, insurance, etc.) Accord-
ing to the same view, the inequality of the system is further enhanced by
the fact that the more affluent have many means at their disposal in order
to evade direct taxation, through which these services are, mainly,
financed.
However, though it is true that tax evasion flourishes among the
affluent, this does not mean that there are no ways to tax them, on the basis
not so much of their income — which is indeed easily concealed - but of
their luxury consumption and property. Also, in regard to the argument
that the middle classes can better claim social benefits, this constitutes the
precise reason for which the abolition of the welfare state's universality
would lead to a kind of charity 'safety net' for the destitute - exactly as was
the case in turn of the century Europe. Thus, the various indirect ways
proposed to abolish universality (which, typically, would force the affluent
classes to return - usually through taxation - the value of the social services
rendered them by the state) would merely provide an additional incentive
for the privileged 'contended electoral majority' to withdraw from the
social coverage of their basic needs, in favour of private coverage and to
push professional politicians into further downgrading the quality of
social services. It is therefore obvious that a system such as the one
proposed by the European social liberals would easily end up resembling
the American health and education system, which, with its extreme
polarization between the high quality services provided by the private
sector as compared to the misery of the state sector's services, must be the
most socially unjust system among advanced industrialized countries. The
only way in which the abolition of universality would not lead to such an
outcome would be the parallel elimination of the private sector in the
90
THE GROWTH ECONOMY

provision of social services - which is, of course, inconceivable in today's


neoliberal market economy.
It is, therefore, obvious that the myth of the explosion in social
expenditures is nurtured for other reasons and not because of the supposed
financial crisis of the system, due to demographic or similar reasons. In
Denmark, many hospitals have already established an age limit for admis-
sion (the present limit is 70), not because the proportion of elderly people
in the population has increased, but because, in the framework of the
neoliberal consensus, the number of hospital beds has been reduced by 25
per cent in the past 10 years. Similarly, in Britain, it was recently
85

revealed that many hospitals have reduced the age limit for treatment of
86

several diseases to 65! Therefore, the real reason for the savage cut in social
expenditure is that, in the framework of an internationalized market
economy, the higher a country's 'social wage' the lower its competitive-
ness. For EU countries in particular, in which the social wage has
traditionally been — and still is — considerably higher than in the countries
of the competitive economic regions (North America, the Far East), the
problem has already become critical.
Universality, of course, does not eliminate inequalities, which are the
main by-product of the market economy itself. However, within the
present institutional framework (which is taken for granted by social
liberals), universality helps to prevent the creation of a dual system, that is,
a system in which the needs of a large portion (if not the majority) of the
population are under-covered by a 'safety net', whereas the needs of the
rest are over-covered by the private sector.
All the same, from a radical perspective, the real choice is not between
a neoliberal system that directly abolishes universality and a social liberal
system that indirectly achieves the same aim: both systems enhance the
citizens' dependence on the state and/or the market in covering their basic
needs. The real choice is between a system of social services that enhances
this dependence and an alternative system that would strengthen the
citizen's self-reliance and assign the system's control to the citizens them-
selves, through their communities.

The decline of social democracy in the European Union


The fate of social democracy in its cradle, Europe, is indicative of the
failure of socialist statism's milder form. The substitution of the present
neoliberal consensus for the social-democratic consensus is clearly discern-
ible in the course followed by the European Union (EU), which by the
end of the century may include most European states.
The process to create a single European market, which began in the
1950s with the Rome Treaty, accelerated in the past few years with the

91
TOWARDS AN INCLUSIVE DEMOCRACY

Single Market Act that was put in effect in 1993, and the 1992 Maastricht
Treaty, which replaced the Rome Treaty and will be in full effect by the
end of the century. Accelerating the integration process was made impera-
tive by the growing internationalization of the market economy and the
intensifying competition with the other two parts of the Triad (North
America and Japan). The supporters of the acceleration process maintained
that, in the ultra-competitive internationalized market economy of the
twenty-first century that is now dawning, only a market of continental
dimensions could provide the security and the economies of scale needed
for the survival of European capital. And indeed, during the past decade,
the economic gap between the European countries and the rest of the
Triad has widened considerably; a characteristic indication of the widen-
ing gap is the fact that the EU's world export share decreased by about 7
per cent between 1980 and 1994, the US's share fell by only 2 per cent,
whereas the Japanese share increased by a massive 31 per cent. The main
87

cause of Europe's failure is the fact that its competitiveness has for long
been lagging behind the competitiveness of the other regions. Thus,
European competitiveness has fallen by 3.7 per cent since 1980, while US
competitiveness has risen by 2.2 per cent and Japanese competitiveness
(which for many years has been on top of the competitiveness league)
increased by 0.5 per cent. 88

The form that the integration has taken reflects, in various ways, the
dominant neoliberal trend. Had, for instance, the acceleration of this
process started in 1979 — when a European Commission's report was still
foreseeing a European Union built on 'indicative planning' at the con-
tinental level — a very different picture of European integration might
89

have emerged. In fact, the European Commission's report was accurately


reflecting the essence of the social-democratic consensus, which had just
started breaking at the time. Its proposal amounted to a kind of 'European
Keynesianism' that should have replaced national Keynesianism, which
had already become - under conditions of increasingly free movement of
capital - obsolete.
However, the collapse of the social-democratic consensus, following
the flourishing of the neoliberal trend in the past decade, brushed aside the
proposals for a European Keynesian strategy. Thus, the tendency that
eventually prevailed in the EU was one that identified economic unifica-
tion with the radical shrinking of national control on economic activity,
without the parallel establishment of supra-national control — apart from
monetary control. Consequently, the EU's executive power has been
confined to creating a homogeneous institutional framework that allows
for unimpeded entrepreneurial activity, while simultaneously providing
for some minimal guarantees (those compatible with the neoliberal con-

92
THE GROWTH ECONOMY

sensus requirements) regarding the protection of the environment and the


social space.
The agreement for the single market rests on the main neoliberal
assumption that the EU's economies are suffering from a lack of 'structural
adjustment', that is, from structural deficiencies due to inflexibilities of the
market mechanism and barriers to free competition. Such barriers that are
mentioned in the Cecchini Report, on which the official ideology of the
single market rests, are the various physical, technical and fiscal barriers that
obstruct the flow of commodities, capital and labour. As regards the
90

capital market in particular, freeing this market from any controls, that is,
the creation of conditions for the easy and unrestricted flow of capital
between countries, is considered to be a basic requirement in this process.
This is why the abolition of all foreign exchange controls has always been
considered an essential condition for the 'Single European Market of
1993'.
However, the most important barriers are not the ones explicitly
mentioned in the Report, but those implied by the emphasis it places on
competition. These implied barriers are the 'institutional' barriers to free
competition that had been introduced by the social-democratic consensus
and which the agreement for the single market undertook to eliminate — a
task brought to completion by the Maastricht Treaty. Such institutional
barriers were the Keynesian type of state interventionism to secure full
employment, the large welfare state that created fiscal problems, the labour
unions' 'restrictive practices' and the public corporations, which did not
always act on the basis of micro-economic criteria to raise economic
efficiency. These barriers, as long as the degree of internationalization of
the European economies was still relatively low, did not have a substantial
negative effect on economic growth. However, once the growing inter-
nationalization of the economy and, in particular, the enlarged mobility of
capital ceased to be compatible with the implementation of national
macro-economic policies on Keynesian lines, their negative effect on
growth became evident, as manifested by the stagflation crisis of the 1970s
which hit particularly hard the European economies. 91

Therefore, the Maastricht Treaty's basic aim was to attack the symptoms
of these institutional barriers and, in particular, inflation and the huge
public sector deficits caused by the expansion of statism. In keeping with
this logic, the only economic criteria mentioned by the Treaty are stable
prices, sound public finances and a sustainable balance of payments,
whereas full employment and improving (or even maintaining) social
welfare standards are not even mentioned as objectives! Article 3A of the
Maastricht Treaty, which is presumably the most important article of the
whole treaty, states clearly that:

93
TOWARDS AN INCLUSIVE DEMOCRACY

The primary objective [of the single monetary and exchange rate policy] shall
be to maintain price stability and, without prejudice to this objective, to
support the general economic policies in the Community, in accordance with
the principle of an open market economy with free competition . . . These
activities of the Member States and the Community shall entail compliance
with the following guiding principles: stable prices, sound public finances and
monetary conditions and a sustainable balance of payments. 92

So, it is not surprising that Maastricht's 'social dimension' (which has


been promoted by social democrats as a significant success) is, in fact, of
very little significance, since it does not provide for any effective mecha-
nisms — of equal significance, say, to the anti-inflation mechanisms it set up
— in order to safeguard the right to work, the narrowing of inequalities, the
eradication of poverty, etc. The treaty's Social Charter itself (for which the
social democrats take great pride) aims at economic rather than social goals.
Its real aim is to create homogeneous social structures within the EU so
that the relatively affluent workers in the metropolitan countries can cope
with the competition from peripheral countries, where the 'social wage' is
much lower. As one researcher observes on the subject, the Social
93

Charter is not interested in people but in efficient and productive labour


units. This is obvious, considering the fact that the Social Charter does not
even mention the unemployed, those working at home caring for chil-
dren, the elderly, the disabled, and that there is no provision in it with
respect to the right to shelter, the right to education (apart from pro-
fessional training), the right to health care for those out of work, or even
general political rights. 94

The Maastricht Treaty, therefore, simply confirmed the overtly neo-


liberal character that the Community had begun to acquire with the Single
Market Act. The improvement of competitiveness, through the reduction
of inflation, remains the primary goal. To this goal belong the mechanisms
to be established by the second and third phases of the Economic and
Monetary Union (EMU). Thus, the EMU, as indeed the single market,
signifies not the integration of peoples, or even the integration of states,
but just the integration of free markets. Still, free markets mean not just the
unimpeded movement of commodities, capital and labour, but also
'flexibility', that is, the elimination of barriers to the free formation of
prices and wages, as well as overall curtailing of the state's control on
economic activity. And this is, in fact, the essence of the neoliberal
consensus that characterizes the EU's new institutional framework, i.e. the
further marketization of the EU's economy. Thus, the aim of the new
institutions is obvious: to maximize the freedom of organized capital, the
concentration of which is facilitated in every way (as was attested, for

94
THE GROWTH ECONOMY

instance, by the mass takeovers and mergers that took place in the late
1980s in view of the single market) and to minimize the freedom of
organized labour, through any means available and, particularly, through
the threat of unemployment.
It is indicative that national economic control on the level of economic
activity and employment (which, in effect, is phased away through the
abolition of fiscal freedom imposed by the 'convergence' criteria) is not
replaced by a common European control of economic activity to secure
full employment. Thus, whereas in the fight against inflation, which
directly endangers the competitiveness and profit margins of European
capital, there is provision even for the creation of a new supra-national
institution (common central bank), the fight against unemployment is, in
effect, left to the market forces, ensuring that, in the future, unemploy-
ment, underemployment and the consequent widening of inequality will
be the rule. Of course, the possibility cannot be ruled out that a more
flexible labour market might create new jobs, as happened in the USA in
the last ten years or so. But the price to be paid to 'solve' the problem the
'American way' would be the acceleration in the rise of inequality and
poverty.
Finally, the collapsing national welfare state is not being replaced by a
common social policy that would guarantee the coverage of basic needs
(health, education, social security, etc.) and a minimal income for all that
would drastically reduce 'Euro-poverty'. Thus, in the interest of enhanc-
ing competitiveness to face America and Japan, the European ideal has
degenerated today into a kind of 'Americanized Europe', where luxury
and extreme poverty stand side by side and the comfortable life of the '40
per cent society' is a mirror image of the marginalization of the rest.
Britain, which was the first European country to embark on neoliberal
policies, now enshrined in the Maastricht Treaty, may be perhaps showing
the future image of Europe. In Britain, the income share of the 10 per cent
of the population at the bottom of the social pyramid fell, during the last
years of Thatcherism, by over a third (from 4.65 per cent in 1979 to 3 per
cent in 1991), whereas the share of the top 10 per cent rose by about 21 per
cent (from 20.4 per cent to 25 per cent). 95

Therefore, the institutional framework that is being established today in


Europe consists of a model in which the continuation of growth depends
on a process of further internationalizing its economy, through the
destruction of local economic self-reliance and the continual expansion of
exports to cope with a growing volume of imports. In this process, which
takes place both between regions (the EU against the Japanese and
American parts of the Triad) and inside each region, the victors will be the
95
TOWARDS AN INCLUSIVE DEMOCRACY

most competitive ones, who possess the production and technological


bases that allow for the continual increase in productivity.
So, the social democrats are not to be blamed for 'betraying' the socialist
ideals and consenting to the neoliberal content of the new Europe now
emerging. Nor simply is the present recession to be blamed, which for
some social liberals is due to the recessionary policies adopted by EU
member states in their effort to meet the Maastricht convergence criteria.
If we accept interpretations such as these, then the replacement of the
neoliberal institutional framework is simply a matter for the 'true' socialists
to gain power, who, in the context of economic recovery, would reinstate
the institutional framework of the social-democratic consensus. In fact,
there is no betrayal involved nor is the radical change of the institutional
framework 'from within' possible in the future. In other words, if we take
for granted what social democrats and their fellow travellers in the Green
movement take for granted, that is, the internationalized market economy,
as well as the need continually to improve competitiveness by freeing
further the markets for commodities, capital and labour, then the content
of social democracy must necessarily be the one supported today by social
liberals.
The reason is that, within the framework of the internationalized
economy, which constitutes the latest phase in the marketization process,
the minimization of the state's social role does not constitute a choice but
a precondition for European capital to compete effectively with Japanese
and American capital, which, given the lack of a social-democratic
tradition in the USA and the Far East, face much weaker institutional
barriers. Today, therefore, social democracy has meaning neither at the
national level nor at the supra-national level of post-Maastricht Europe, as
we have seen in Chapter 1. Any attempt by European social democrats to
change the present institutional framework in order to radically enhance
the state's social role would make Europe less competitive than Japan or
the USA and would result in a mass exodus of European capital. Also, a
new, Europe-wide Keynesianism is not feasible, unless it was going to be
combined with a self-reliant growth led by a highly protected internal
market economy. But such a solution is in direct contradiction to the
system's logic and dynamics. For the same reason, the proposals to
renegotiate the Maastricht Treaty, in order to introduce social-democratic
aims in the EU, are equally Utopian in the negative sense of the word.
The issue, therefore, is not whether it will be neoliberal or, alterna-
tively, social-liberal elites that will administer political power, with the
TNCs administering economic power. The real issue is whether power
will belong exclusively to the citizens and their communities, within an
institutional framework entirely different from the present one. So, the

96
THE GROWTH ECONOMY

true alternative solution would be to abandon the institutional framework


of the market economy itself, whether social liberal or pure neoliberal, and
to create a new institutional framework aiming to meet true needs, rather
than the ones created by the market/growth economy. Such a system,
based upon the political and cultural autonomy of the European regions, as
well as their economic self-reliance, would be capable of providing a
comfortable standard of living for all the citizens of a new and true
European 'Community'.

A European 'social market': the new social-democratic myth


In the last few years a new 'vision' has been conquering European social
democrats: the vision of a continent-wide 'social-market economy'. Thus,
Michel Albert argues that 'capitalism is no monolithic structure, but an
aggregate of tendencies out of which, in each case, two diverging currents,
two broad "schools" emerge'. These two models are what he calls 'the
96

neo-American model' and the 'Rhineland' model of the social market


(which includes primarily Germany, but also the Scandinavian countries
and to some extent Japan). So, the author explicitly assumes the existence
of differing national capitalisms which are characterized by different
financial structures and - more important from our point of view -
different systems of social protection: from almost complete lack of social
protection in the USA, and rapidly diminishing social protection in the
UK, to a significant level of social protection in Germany.
Thus, according to Albert, in the post-war period, a social market was
created in Germany, a type of 'stakeholder' capitalism which reordered the
institutional structure in a way that attempts to capture for the population
as a whole the social returns of their contributions to production. A key
element of this type of capitalism is its regulated labour market. Instead of
the liberalized and deregulated labour markets, which thrive in the UK
and the USA, the labour market in Germany still involves a lot of social
controls: high redundancy payments, long notice periods, restrictive trade
practices, long holidays, etc. Therefore, given the high economic
performance of Germany in the post-war period up to the early 1990s, the
conclusion could easily have been drawn that the Rhine model of
capitalism not only is economically superior but should also be adopted
because of its obvious social superiority.
However, it is now obvious that, in the competition between the USA/
UK model of liberalization and the Rhineland social market model, it is
the former that is the clear winner. This is, of course, not surprising in view
of the analysis in Chapter 1. The Rhine model is not a model for future
capitalism but a remnant of the statist phase of marketization, which
obviously cannot survive the present internationalization of the market

97
TOWARDS AN INCLUSIVE DEMOCRACY

economy. Thus, as soon as marketization all over the world intensified in


the 1990s, the Rhine model entered a period of crisis, giving the clear
signal that no national capitalism is viable which has not 'homogenized'
its social controls on the markets, in accordance with those of its
competitors.
A clear indication of this crisis is given by such phenomena as the long-
term slowdown in economic growth, the flight of capital and the explo-
sion of unemployment. Thus, the average annual growth rate of the
German GDP has fallen from 3.3 per cent in 1965-80 to 2.1 per cent in
1980—90. Also, since 1990, German investment abroad has been five
97

times higher than foreign direct investment in Germany. In fact, shifting


98

production to lower-cost countries has destroyed one million jobs in


Germany since 1991. This contributed significantly to unemployment,
99

which rose by 50 per cent within the last three years whereas, at the same
time, US unemployment fell by almost a quarter (for the significance of
100

the American 'solution' to the unemployment problem, see Chapter 4,


p. 141). Today, official unemployment in Germany has already reached
four million (10 per cent of the labour force) and the real number out of
work may be nearer the six million mark. 101

This crisis can be attributed directly to the various inflexibilities that the
German 'social market' has introduced to the labour market, which meant
that the unit labour cost in German manufacturing was the highest in the
world in 1993: 50 per cent higher than in the USA and Japan, double that
of Britain, five times higher than in the Asian Tiger countries and 46 times
higher than in China or Russia! Furthermore, productivity growth in
102

the early 1990s was falling significantly faster than wages, increasing unit
wage costs even more and causing further deterioration in German
competitiveness. This development adversely affected both foreign
103

investment, as companies were reluctant to invest in a high-cost country,


and exports. Thus, Germany's share in world exports fell by 12 per cent in
just four years according to the latest data. 104

It is therefore not surprising that the German economic elite is already


demanding the abolition of the system of collective bargaining and urging
the strict implementation of the Maastricht criteria, so that the social
market will wither away under the marketization pressures built into the
system for European Monetary Union. At the time of writing (May 1996)
the Kohl government has already announced a package of measures to
liberalize the labour market and to restrict the welfare state, in effect
signalling the end of the German 'social market' and, in the process,
creating significant trade union unrest.
Still, European social democrats, faced with the fact that the adoption of
the 'social market' is not feasible any more at the national level, are now
THE GROWTH ECONOMY

proposing the Europeanization of the social market. Thus, Will Hutton


argues:
The countries of EU together have the power to regulate the financial markets
and control capital flows, and to play apart in compelling the US and Japan
to regulate their relationship better, as part of a world deal . . . Europe can
insist on common social rights across the continent so that MNCs cannot play
one state off against another in an effort to bid down wages and working
conditions. Europe can set common environmental standards and common
rules of corporate governance, establishing the concept of the stakeholder
company. Indeed social market Europe can formalise its rules and codes so
that . . . a cooperative, more committed form of capitalism could be de-
fended.105

However, as it was argued in Chapter 1, the case for market controls can
only stand if these controls are of the simple regulatory type. It is obvious
that the USA and Japan will have no difficulty agreeing on the introduc-
tion of such controls that will make the functioning of the market
economy smoother. But if these controls are of the type we called 'social
controls in a narrow sense' - like the controls suggested in the above quote
— neither Japan nor the USA will have any incentive (nor any pressure
from their electorate given the weak social-democratic tradition in these
countries) in agreeing to such controls that will deprive them of a
significant comparative advantage over European, particularly German,
industries. Therefore, the only possibility for introducing such controls at
the European level will be through cutting off Europe from the inter-
nationalized market economy. In fact, the case for a 'new protectionism'
to protect employment or the environment has gained ground lately
among European socialists and environmentalists. 106

But the fact that multinational corporations play a crucial role in the
internationalized market economy and that their activities are not just
intra-regional but inter-regional prescribes the fate of protectionist move-
ments. Indicative is the fact that it was mainly inter-regional rather than
intra-regional trade that benefited in the period of accelerating inter-
nationalization (1958-89). Thus, despite the growth in intra-regional
trade, particularly within the EU, the largest increases in trade flows in the
period 1958—89 were for inter-regional trade, i.e. trade between North
America and the EU with Asia. It is obvious that the grow-or-die
107

dynamic of the market economy cannot be restricted within the boun-


daries of an economic bloc like those in Europe (the EU) or in North
America (NAFTA), in the same way that it was never contained histori-
cally in the boundaries of the nation-state.
The demand for a new protectionism, if it takes for granted the existing

99
TOWARDS AN INCLUSIVE DEMOCRACY

framework of the market economy and competition (as is the case with
protectionists either of the 'Left' - Green protectionists — or of the Right
- Buchanan et al. in the USA, Goldsmith in the UK) is both a-historical
and utopian, in the negative sense of the word. It is a-historical, because it
ignores the structural changes that have led to the present neoliberal
consensus and the internationalized market economy. It is Utopian, be-
cause it disregards the fact that any effective attempt to intervene with the
system of the market economy in the form of protectionism (either of the
'old' or the 'new' variety) is bound to be inefficient and non-competitive
and, as such, against the logic and the dynamics of the system itself.
Furthermore, it is utopian because it assumes that the 'greening' of trade,
or the IMF/World Bank, or capitalism itself, is just a matter of persuading
people about the evils of the free trade 'ideology'. Similarly, the proposal
to minimize the role of the market ('the issue is not so much one of going
"beyond" the market economy, but rather of reducing it to a minimal,
functional level in our lives, putting it in its necessary place' ) easily brings
108

to mind the wish to be 'a little pregnant'!

Why 'socialist' statism failed


In this last section I would like to argue that the fundamental reason for the
historic failure of socialist statism in both its versions ('actually existing
socialism' and social democracy) lies in its attempt to merge two incompat-
ible elements: the 'growth' element, which expressed the logic of the
market economy, with the social justice element, which expressed socialist
ethics. This is so because whereas the growth element, as part of a growth
economy, implies the concentration of economic power (whether as a
consequence of the functioning of the market mechanism, or as a built-in
element of central planning), the social justice element is inherently linked
to the dispersion of economic power and to equality, i.e. to economic
democracy. Thus, socialist statism, in its effort to make the benefits of
growth accessible to everyone and lend universal meaning to Progress -
which was identified with growth — attempted to create a socialist growth
economy, disregarding the fundamental interdependence of growth and
the concentration of economic power.
Moreover, the attempt to merge the growth element with the social
justice element created a fundamental incompatibility between the ends
and means. Thus, whereas the capitalist growth economy constituted the
inevitable consequence of the market economy and, therefore, the means
(market economy) and the end (growth economy) were perfectly compat-
ible in this case, in the case of socialist statism, the end (growth economy)
was not compatible with the means (social-democratic statism/central
planning). In fact, the greater the degree of statism (as in the case of central

100
THE GROWTH ECONOMY

planning), the greater the incompatibility between the means and ends,
contributing even more to the failure of the system.

The role of growth, competitiveness and efficiency


The fact that both the capitalist growth economy and socialist statism
shared the same goal, that is, economic growth, meant that the same
principles played a decisive part in the organization of production and in
economic and social life in general, irrespective of whether the production
motive was private profit or some kind of 'collective' profit. This becomes
obvious by the fact that the principles of economic efficiency and com-
petitiveness mark both types of socialist statism. Thus, as regards economic
efficiency, both the 'socialist' growth economy and the social-democratic
version of socialist statism adopt it as a necessary condition for maximizing
growth. Also, as regards competitiveness, it is either a direct consequence
of an enterprise's integration into the market economy (nationalized in-
dustries in the case of social democracy), or an indirect consequence of a
socialist growth economy's integration in the world growth economy.
In this problematic, it is hard to accept Gunder Frank's assertion that the
countries of 'actually existing socialism' did not have any other choice but
to submit to the competitiveness principle. Competitiveness was not
109

imposed on these countries by their integration into the world market, but
because of their competitive participation in the world growth economy (let's
catch and overtake America). In fact, the integration of these countries
into the world market economy was never complete. This is shown, first,
by the fact that Eastern Europe's trade with the West has historically
represented a very small proportion of world trade: Eastern Europe's trade
was less than 5 per cent of the pre-war world trade and about 10 per cent
of the post-war trade. Second, the fact that their internal price structure
110

was very different from that of the world market has become evident after
the collapse of 'actually existing socialism' and the very difficult problems
that the Eastern European countries faced in adjusting to world price
structures.
In more detail, with regard, first, to the principle of economic effi-
ciency, this principle had always been the standard of assessing success with
respect to the aim of developing the forces of production in the 'socialist'
growth economy. The objective in designing technology and organizing
production was, on the one hand, to maximize efficiency and, on the
other, to ensure the maintenance and reproduction of hierarchical struc-
tures. This is the reason why a modern Soviet factory, even in Lenin's
times (with his encouragement), in no way differed — in terms of internal
functioning, hierarchical organization of production, etc. — from an
equivalent capitalist one. This, of course, simply reflected the socialist-

101
TOWARDS AN INCLUSIVE DEMOCRACY

statist belief in the 'neutrality' of technology. Thus, in exactly the same


way as technology was considered by socialist-statists as a neutral means,
that could be used by any social system to achieve a specific aim, efficiency
was also held as a neutral means, in achieving the growth objective.
Moreover, the fact that the socialist growth economy adopted the same
definition for economic efficiency as the capitalist growth economy (that
is, a definition based upon narrow techno-economic criteria which did
not include the ecological cost of growth) implied that the ecological
consequences of growth were bound to be serious. Thus, despite the fact
that in the socialist growth economy the growth process was not com-
bined with the marketization of the economy, as in the West, it still
resulted in significant ecological damage (in fact, greater than in the West,
due to the lower level of technology in the East).
With regard, second, to the principle of competitiveness, this principle
remained intact in Western social democracy, which simply tried to
'marry' statism with capitalist competition. For instance, nationalized
industries never ceased to be a part of the market economy and were
motivated in various ways to be competitive with other industries, private
or public, domestic or foreign. In 'actually existing socialism' as well,
despite the occasional official attacks against individualism, the material
incentives (to produce 'more' and to produce 'better') to which these
countries had long ago resorted as a substitute for socialist self-
management, were but the confirmation of an implicit principle of
competitiveness. So, the competitiveness principle, which is the basic
organization principle of the market economy, was never abandoned as an
explicit aim by Western social democracy, or as an implicit aim in 'actually
existing socialism', despite the fact that both these two versions of socialist
statism represented (each to a different degree, of course) an attempt to
transcend the institutional framework of the market economy. However,
competitiveness is incompatible with the economic self-reliance of social
individuals and their communities, leading to an increasing division of
labour and specialization and, subsequendy, to the concentration of
economic power in the hands of the elites controlling the economic
process.
One may therefore argue that from the moment both versions of
socialist statism showed that, in the last instance, they rested on the same
fundamental principles as the market economy did and that they were,
inevitably, leading to the reproduction of similar hierarchical structures,
the countdown leading to the collapse of socialist statism itself, as well as
the ideologies on which it rested (Marxism/Keynesiamsm), had begun.
This was due to both subjective and objective factors.
The subjective factors refer to the widespread realization of the failure of

102
THE GROWTH ECONOMY

socialist statism to lead to a new form of social organization, a new model


of social life that would transcend the principles characterizing the system
of the market economy. The economic crisis of socialist statism, combined
with the inevitable enhancing of the bureaucratization of social life
(inevitable, in the context of a form of socialism founded on the state and
its bureaucracy), have been the essential factors that led to the credibility
crisis of the socialist project in its statist form. For the average citizen it was
obviously a better bet to choose the 'real thing', which might better
'deliver' in terms of consumer goods, rather than keep supporting a system
that not only was failing in its socialist promises but in certain important
aspects was a bad imitation of the market economy.
The objective factors refer to the fact that, as already mentioned, the
pursuit of efficiency and competitiveness, which the growth objective
implies, fundamentally contradicts the socialist aims. It is obvious that the
criteria of social justice, on which the socialist aims are based, are much
broader than the narrow economic criteria that define economic efficiency
and competitiveness and as such are incompatible with them.

The conflict between the growth economy and


socialist ethics
To conclude, as regards, first, 'actually existing socialism', its failure was
due to the fundamental incompatibility between the requirements of the
growth economy and the functioning of a centrally planned economy.
Whereas in a market economy the market forces are comparatively free to
secure the degree of concentration which is necessary for growth, in a
planned economy the distorting interventions of bureaucrats and planning
technocrats in the growth process, aiming at the contradictory merging of
growth with social justice (for example, in the form of 'hidden unemploy-
ment'), inevitably led to economic inefficiency. Similarly, in a bureau-
cratically organized economic system, it was practically impossible to
introduce new technologies and products, particularly in the consumer
goods sector where a decentralized information system is a necessity.
From this viewpoint, one may assess as partly valid and partly insupport-
able Gunder Frank's thesis that the history of the world system shows
111

that as long as competition constitutes the basic 'fact of life' in the world,
then 'socialism in one country' will not be possible and that 'world'
socialism would not differ significantly from the present world. It is valid
to the extent that it stresses that when an economy is part of the world
market economy, then socialism (in the form of socialist statism - and, I
would add, in the form of the autonomous civil society) is indeed not
possible. This is why, as I will try to show in Chapter 6, the realization of
the liberatory project is only possible within the framework of a new type

103
TOWARDS AN INCLUSIVE DEMOCRACY

of economy, which would be neither another version of the market


economy, nor of the growth economy.
At the same time, Gunder Frank's thesis is insupportable when it claims
that 'the same world system, and its essential structure and "mode" of
operation, goes back for at least 5000 years'. The market economy, as a
self-regulating system, where the basic economic decisions are taken
through the market mechanism, is hardly 200 years old, as we saw in
Chapter 1, and as has been convincingly shown, mainly by Polanyi. 112

Therefore, the fact that markets and competition preceded the Industrial
Revolution does not negate the equally significant fact that their role in
the past was marginal to the economic process. Thus, in the period before
the emergence of the market economy, the forces of competition did not
play any significant role, as far as price formation is concerned, nor were
prices the basic way of allocating economic resources. The question,
therefore, that arises is whether Gunder Frank, in (rightly) rejecting the
Marxist theory of history, throws away the baby with the bath water and
(wrongly) rejects any other interpretation of history, levelling out all the
crucial differences between the present market society and previous
societies, just because they all share some form of market.
Finally, as regards social democracy, it was the same attempt to merge
growth with social justice that led to the collapse of the social-democratic
consensus. The basic features of the social-democratic consensus also
aimed at the decentralization of economic power — an aim that inherently
contradicts the logic and dynamics of the market economy. To the extent
therefore that the social-democratic consensus was successful in its aim,
and brought about a change in the social balance of power, it was no longer
compatible with the growing internationalization of the market economy.
In this sense, the present predominance of the neoliberal consensus and the
consequent concentration of economic power constitute the natural
'reaction' of the growth economy to the social-democratic 'action' and, at
the same time, a stage in the completion of the historical process of
marketizing the economy and society.

Notes
1. See Takis Fotopoulos, Dependent Development: The Case of Greece (Athens:
Exantas Press, 1985, 1987), Ch. A (in Greek).
2. The usual definition of economic efficiency is in terms of technical efficiency (input
minimization or output maximization for any given combination of inputs),
production efficiency (which implies that no reallocation of resources could
increase output) and exchange efficiency (which implies that no further
exchanges could improve consumer welfare). However, this supposedly
'neutral' definition of efficiency assumes away distributional aspects so that it
is perfectly possible for a particular allocation of resources to be 'efficient'

104
THE GROWTH ECONOMY

and, at the same time, not capable of meeting adequately (or not at all) the
needs of many citizens.
3. Cornelius Castoriadis, Philosophy, Politics, Autonomy (Oxford: Oxford
University Press, 1991), p. 184.
4. Adam Smith, The Wealth of Nations (Harmondsworth: Penguin, 1970),
p. 104.
5. As Sean Sayers observes, drawing from Marx's Capital, Vol. 3, and Grundrisse,
'Marx regards the immense expansion of production to which capitalism has
led as its progressive and "civilising" aspect'; Sean Sayers, 'Moral values and
progress', New Left Review, No. 204 (Mar.-Apr. 1994), pp. 67-85.
6. John Grahl referring to the study by Elman Altvater, The Future of the
Market (London: Verso, 1993), New Left Review, No. 214 (Nov.-Dec. 1995),
p. 155.
7. See James O'Connor, 'Capitalism, nature, socialism', Society and Nature,
Vol. 1. No. 2 (1992), pp. 174-202.
8. Murray Bookchin, The Philosophy of Social Ecology (Montreal: Black Rose,
1995) , p. 142.
9. Martin J. Conyon, 'Industry profit margins and concentration: evidence
from UK manufacturing', International Review of Applied Economics, Vol. 9,
No. 3 (1995), p. 288.
10. P. Nolan and K. O'Donnell, 'Restructuring and the politics of industrial
renewal: the limits of flexible specialisation' in A. Pollert (ed.) Farewell to
Flexibility? (Oxford: Blackwell, 1991), p. 161.
11. Tim Lang and Colin Hines, The New Protectionism: Protecting the Future Against
Free Trade (London: Earthscan, 1993), p. 34.
12. See, e.g., Petr Kropotkin, Fields, Factories and Workshops Tomorrow (London:
Hutchinson, 1899); and the additional data and comments by Colin Ward in
the 1974 edition of the book (London: Allen & Unwin). See also Kropotkin,
The Conquest of Bread (Harmondsworth: Penguin, 1972), Ch. 16.
13. Petr Kropotkin, Fields, Factories and Workshops Tomorrow, pp. 32—4, 41—4.
14. P.J. McGowan and B. Kurdan, 'Imperialism in world system perspective',
International Studies Quarterly, Vol. 25, No. 1 (March 1981), pp. 43-68.
15. Paul Bairoch, The Economic Development of the Third World Since 1900
(London: Methuen, 1975), pp. 190-2.
16. Data calculated from the World Bank's World Development Report 1994 and
World Development Report 1981 (Washington, DC: World Bank).
17. International Monetary Fund, International Financial Statistics (various years);
World Bank, World Development Report 1995, Table 13.
18. Paul Hirst and Grahame Thompson, Globalization in Question (Cambridge:
Polity Press, 1996), Tables 3.2, 3.3, 3.4.
19. Mike Campbell, Capitalism in the UK (London: Croom Helm, 1981), Table
3.2; and John Allen and Doreen Massey (eds), Restructuring Britain: Tlie
Economy in Question (London: Sage, 1988), Diagram 5.1.
20. Phillip Armstrong et al, Capitalism Since World War II (London: Fontana,
1984), pp. 216-18.
21. John Allen and Doreen Massey (eds), Restructuring Britain: Tlie Economy in
Question, pp. 192-200.
22. Paul Hirst and Grahame Thompson, Globalization in Question, p. 53.
23. See, for instance, the interview of Alvin Toffler in The Guardian (13 Jan.
1996) .

105
TOWARDS AN INCLUSIVE DEMOCRACY

24. Michael Carley and Ian Christie, Managing Sustainable Development (Minnea­
polis: University of Minnesota Press, 1993), p. 50.
25. Andrew McLaughlin, 'What is deep ecology?', Capitalism, Nature, Socialism,
Vol. 6/3, No. 23 (Sept. 1995).
26. World Bank, World Development Report 1995, Table 2.
27. Paul Hirst and Grahame Thompson, Globalization in Question, p. 163.
28. For a comprehensive analysis of this process, see the work of Murray
Bookchin and, in particular, his works Remaking Society (Montreal: Black
Rose, 1990), The Ecology of Freedom (Montreal: Black Rose, 1991) and From
Urbanization to Cities (London: Cassell, 1995).
29. V. Lenin, The State and Revolution (Moscow: Foreign Languages Publishing
House, 1917), p. 30.
30. G.P. Maximoff The Political Philosphy of Bakunin (New York: The Free
Press, 1953), p. 287.
31. See, e.g. Michael Bleaney, The Rise and Fall of Keynesian Economics (London:
Macmillan, 1985), esp. Ch. 12.
32. See, e.g. Paul Sweezy, The Theory of Capitalist Development (New York:
Monthly Review Press, 1942), pp. 87-92.
33. Michael Ellman, Socialist Planning (Cambridge: Cambridge University Press,
1979), pp. 267-8.
34. The Guardian (26 Nov. 1992).
35. Michael Barratt-Brown, Models in Political Economy (Harmondsworth: Pen­
guin, 1984), p. 144.
36. A. Szymanski, 'The socialist world system', in Socialist States in the World
System, C.K. Chase-Dunn (ed.) (London: Sage Publications, 1982),
Table 2.3.
37. For an exposition of the liberal view, outside the extremist Right see, for
example, the work of the prominent British sovietologist Alec Nove, The
Economics of Feasible Socialism (London: Allen & Unwin, 1983). For a Left
socialist-statist critique of Nove's work, see E. Mandel, 'In defence of
socialist planning', New Left Review, No. 159 (Sept.-Oct. 1986).
38. Alec Nove, 'The Soviet economy: problems and prospects', New Left Review,
No. 119 (Jan.-Feb. 1980), pp. 3-19.
39. Such views are expressed, e.g. by Cornelius Castoriadis, Political and Social
Writings (Minneapolis: University of Minnesota Press, 1988), Vols 1-2, as
well as by the East German Green, Rudolf Bahro - at the time he had not yet
adopted the case for the 'Green Adolf (see Janet Biehl, 'Ecology and the
modernization of fascism in the German ultra-right', Society and Nature, Vol.
2, No. 2 (1994) - R . Bahro, The Alternative in Eastern Europe (London: Verso,
1978).
40. See the interview given by Alexander Yakovlev to 77/ί· Guardian (20 Aug.
1991) and also his book, The Fate of Marxism in Russia (Yale: Yale University
Press, 1993).
41. Leon Trotsky, The Revolution Betrayed (New York: Merit, 1965).
42. Peter Gowan, 'Neo-liberal theory and practice for Eastern Europe', New Left
Review, No. 213 (Sept.-Oct. 1995), p. 40.
43. Jeffrey Sachs, 'What is to be done?', The Economist, 13 January 1990.
44. Peter Gowan, 'Neo-liberal theory and practice', pp. 6-7.
45. Peter Gowan, 'Neo-liberal theory and practice', p. 24.
46. J.M.C. Rollo and J. Stern, 'Growth and trade prospects for Central and

106
THE GROWTH ECONOMY

Eastern Europe', The World Economy, No. 199 (quoted by Peter Gowan,
'Neo-liberal theory and practice', p. 55).
47. Indicatively, Yeltsin and the Russian central bank, in order to receive a 1.5
billion dollar loan, had to promise the International Monetary Fund that they
would drastically reduce state subsidies of Russian exports. All this, while the
EU had refused to reduce tariffs on Eastern products, causing a further
widening of the deficit in the Russian trade balance; The Guardian (26 May
1993).
48. The Guardian (24 Mar. 1993).
49. The Guardian (16 Mar. 1994).
50. OECD, Integrating Emerging Market Economies into the International Trading
System (Paris: OECD, 1994) (quoted by Peter Gowan, 'Neo-liberal theory
and practice', p. 17).
51. The Guardian (3 Dec. 1994).
52. Quoted by Peter Gowan, 'Neo-liberal theory and practice', p. 22.
53. World Bank, World Bank Development Report 1995, Table 26. According to a
recent study, the crude death rate in Russia has gone up from 11.4 in 1991 to
14.4 in 1993 and 16.2 in the first quarter of 1994 (Michael Ellman, 'The
increase in death and disease under "Katastroika" ', Cambridge Journal of
Economics, No. 18 (1994), p. 349).
54. The Guardian (16 Nov. 1992).
55. The Guardian (7 July 1993).
56. See Markus Mathyl, 'Is Russia on the road to dictatorship?', Green Per-
spectives, No. 34 (Dec. 1995).
57. Alexander Buzgalin and Andrei Kolganov, 'Russia: the rout of the neo-
liberals', New Left Review, No. 215 (Jan.-Feb. 1996), p. 132.
58. Sheldon Wolin, 'What revolutionary action means today' in Dimensions of
Radical Democracy, edited by Chantal Mouffe (London: Verso, 1995, 1992),
p. 241.
59. B. Cumings, 'The abortive abertura', New Left Review, No. 173 (Jan.-Feb.
1989), pp. 5-32.
60. P. Bachrach, The Theory of Democratic Elitism (Boston, 1967), pp. 8-9.
61. Paul Bowles and Xiao-Yuan Dong, 'Current successes and future challenges
in China's economic reforms', New Left Review, No. 208 (Nov.-Dec. 1994),
Table 1.
62. W. Byrd, The Market Mechanism and Economic Reform in China (New York:
Armonk, 1991), p. 219 (quoted by Paul Bowles and Xiao-Yuan Dong,
'Current successes and future challenges in China's economic reforms').
63. World Bank, World Development Report 1991, Fig. 1.1.
64. Richard Smith, 'The Chinese road to capitalism', New Left Review, No. 199,
(May-June 1993), p. 69.
65. Richard Smith, 'The Chinese road to capitalism', pp. 96—7.
66. Paul Hirst and Grahame Thompson, Globalization in Question, p. 108. This
conclusion is also supported by other studies which confirm that the spatial
distribution of income has certainly become more unequal over the reform
period: see, e.g., C. Brammal and M. Jones, 'Rural income inequality in
China since 1978', Journal of Peasant Studies, Vol. 21, No. 1 (Oct. 1993).
67. Andrew Higgins quoting Hu Angang, a prominent Chinese economist at the
Chinese Academy of Social Sciences, The Guardian (30 May 1996).

107
TOWARDS AN INCLUSIVE DEMOCRACY

68. Simon Long quoting an article in the Chinese daily Economic Information
Daily, The Guardian (8 Jan. 1994).
69. Catherine Field, The Observer (13 Feb. 1994).
70. Richard Smith, 'The Chinese road to capitalism', p. 95.
71. Paul Bowles and Xiao-Yuan Dong, 'Current successes and future challenges
in China's economic reforms', p. 50.
72. Gabriel Kolko, Anatomy of a War (New York: The New Press, 1994) quoted
by John Gittings, The Guardian (13 Jan. 1995).
73. 'Introduction', in P. Anderson and P. Camiller (eds), Mapping the West
European Left (London: Verso, 1994), pp. 15-16.
74. Andrew Martin, 'Labour, the Keynesian welfare state, and the changing
international political economy' in Richard Stubbs and Geoffrey R.D.
Underhill, Political Economy and the Changing Global Order (London:
Macmillan, 1994), p. 70.
75. Eric Helleiner, 'From Bretton Woods to global finance: a world turned
upside-down' in Richard Stubbs and Geoffrey R.D. Underhill, Political
Economy, p. 173.
76. Jan Fagerberg et al. 'The decline of social-democratic state capitalism in
Norway', New Left Review, No. 181, May/June 1990, p. 88.
77. See Tom Notermans' article in the June 1993 issue of Politics and Society.
78. Paul Hirst and Grahame Thompson, Globalization in Question.
79. See, e.g., Martin Jacques, Sunday Times (18 July 1993).
80. See, e.g., Nicos Mouzelis, 'Four problems regarding modernization', To
Vima (25 July 1993) (in Greek).
81. The Guardian (20 Dec. 1993).
82. See Will Hutton, The Guardian (18 Aug. 1993).
83. European Consumers Bureau Report/The Guardian (13 Feb. 1992).
84. See, e.g., the article of the LSE Professor Nicos Mouzelis, 'The future of the
welfare-state', in the Athens daily Eleflherotypia (1-2 Jan. 1994).
85. Le Monde (8 Feb. 1994).
86. BBC, April 1994.
87. International Monetary Fund, Financial Statistics (various years).
88. World Economic Forum (1993).
89. See the European Commission, The Challenges Ahead — A Plan for Europe
(Brussels, 1979).
90. Paolo Cecchini, 1992: The European Challenge (London: Wildwood House,
1988), p. 4.
91. The average annual GDP growth rate of important European economies like
Germany, the UK and Italy was significantly less than 3 per cent in the
1970s, whereas that of the USA was over 3 per cent and Japan's growth rate
exceeded 5 per cent (World Bank, World Development Report 1981, Table
2)·
92. European Commission, Treaty on European Union (Maastricht, 1992).
93. D. Piachaud, Professor at LSE, also reaches a similar conclusion; The
Guardian (13 Nov. 1991).
94. F. Weber, 'Impact of the Social Charter', Europe 1992 (Dublin, 1991),
pp. 34, 37.
95. Alissa Goodman and Steven Webb, For Richer, For Poorer (London: Institute
of Fiscal Studies, 1994), Fig. 2.3.
96. Michel Albert, Capitalism Against Capitalism (London: Whurr, 1993), p. 5.

108
THE GROWTH ECONOMY

97. World Bank, World Development Report 1995, Table 2.


98. Norbert Walter, 'German social market economy needs new lease of life',
The Guardian (13 February 1995).
99. Mark Frankland, The Observer (24 December 1995).
100. German unemployment rose from 5.6 per cent in 1991 to 8.4 per cent in
1994 whereas US unemployment was reduced from 7.4 per cent in 1992 to
5.6 per cent in 1995 (European Commission, Eurostatistics (November 1995);
OECD, Economic Outlook, No. 58 (December 1995)).
101. Ian Traynor, The Guardian, 25 January 1996.
102. David Kerr, 'British manufacturing is starting to score at the expense of
inflexible European competitors', The Guardian (16 January 1995).
103. Indicatively, according to the latest World Competitiveness Yearbook (London:
International Institute for Management Development, 1996) Germany fell
from 6th to 10th place in the league of competitiveness between 1995 and
1996, whereas the USA remained at the top.
104. The German export share fell from 11.7 per cent in 1989 to 10.3 per cent in
1993; World Bank, World Development Report, 1991 and 1995, Table 13.
105. Will Hutton, The State We're In (London: Jonathan Cape, 1995), pp.
315-16.
106. Tim Lang and Colin Hines, The New Protectionism: Protecting the Future Against
Free Trade (London: Earthscan, 1993).
107. Marc L. Busch and Helen V. Miller, 'The future of the international trading
system: international firms, regionalism and domestic politics' in Richard
Stubbs and Geoffrey R.D. Underbill, Political Economy and the Changing
Global Order (London: Macmillan, 1994), Table 1.
108. Jeremy Seabrook, The Myth of the Market (Devon: Green Books, 1990)
p. 33.
109. Andre Gunder Frank, 'Is real world socialism possible?', Society and Nature,
Vol. 2, No. 3 (1994).
110. See Alan A. Brown and Egon Neuberger, International Trade and Central
Planning (Berkeley: University of California Press, 1968), Table 1, and, also,
World Development Report (World Bank, various years).
111. Andre Gunder Frank, 'Is real world socialism possible?'
112. See Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1944). For
a recent discussion of Polanyi's thesis, see also Kari Polanyi-Levitt (ed.), The
Life and Work of Karl Polanyi (Montreal: Black Rose, 1990).

109
CHAPTER 3

The Growth Economy and


the South

In this chapter I argue that the 'development problem' is not how to spread
the growth economy of the North more efficiently to the South, as
suggested by conventional approaches (liberal/Marxist/dependency/
regulation theories). In fact, it is argued that it is the very spread of the
growth economy to the South which is the main cause of the economic,
social and ecological crises that affect the majority of the global population.
The grow-or-die dynamic was bound to lead the market economy to
spread itself all over the world, after its emergence in Europe, two
centuries ago. But, whereas the indigenous market economy in the North
led to the creation of a type of growth economy which thrives on a '40 per
cent society', the imported market economy in the South led to a much
more uneven development than in the North and to a bad copy of the
latter's growth economy. So, the multidimensional crisis that affects the
North today is mirrored by an economic, social and ecological near-
catastrophe in the South.
The first part of this chapter begins with a discussion of the failure of the
growth economy in the South and an assessment of the mythology about
the economic 'miracles' of East Asia. This is followed, in the second part,
by a discussion of the conventional approaches to development and their
interpretations concerning the causes of the South's failure. These ap-
proaches are subject to the basic criticism that they all take for granted not
only the desirability of the growth economy, as a general means to
improve human welfare, but also the feasibility of its universalization.
Although some of the radical approaches cast doubt on the possibility of
the growth economy being universalized, they do so only with respect to
its capitalist version.
In the final part of the chapter, after a brief discussion of the ecological
implications of development, it is argued that the failure of the South is
not, in fact, a problem of why the importation of the growth economy was
not successful, not even a problem of 'development' at all, but a problem

110
THE GROWTH ECONOMY AND THE SOUTH

of democracy. The fact that the majority of the earth's population, mostly
in the South but increasingly in the North as well, cannot satisfy even its
basic needs is a clear indication that the dilemma 'growth economy' or
'steady-state' economy is a false one. North and South, which should be
redefined to take into account the global character of today's market/
growth economy, share the same problem: how to create new political,
economic and social structures securing an inclusive democracy that
covers the collectively defined social, economic and cultural needs.

The failure of the growth economy in the South

The spreading of the growth economy


The post-war process of decolonization led to political 'independence' in
the South; it also led to the spreading of the 'growth economy' — a process
that continued and expanded the South's marketization initiated by
colonialism. Depending on the class alliances formed in the newly inde-
pendent countries of the South, the growth economy, following a similar
process to that in the North, has taken the form of either a capitalist growth
economy or a 'socialist' growth economy. At the same time, the growth ideology
and the implied ideology of domination over Nature have become the
dominant ideologies in the South. The growth ideology, in a similar way
as in the North, complements the liberal ideology in the capitalist growth
economy and the socialist ideology in the socialist growth economy.
However, despite the fact that communist parties still monopolize political
power in some parts of the South (notably, China, Vietnam, Laos, etc.) the
socialist growth economy in the South, as defined in Chapter 2, is
effectively being phased out.
The spreading of the growth economy in the countries of the South has
been a dismal failure. This failure has been basically due to the fact that the
growth economy in the South did not develop indigenously, but was,
instead, the outcome of two processes:
(a) the penetration of the market economy system, which was aggres-
sively encouraged by the colonial elites; and
(b) the consequent emergence of the growth economy, which was
'imported' by the newly formed local elites in the post World War II
period.
The failure of the growth economy in the South becomes obvious if we
consider the present degree of concentration of world production in the
North. We may roughly define the North as the set of those countries that
are members of the Organization for Economic Co-operation and
Development (OECD) which the World Bank classifies as 'high income

111
TOWARDS AN INCLUSIVE DEMOCRACY

economies', namely, the USA, Canada, Japan, Australia, New Zealand,


the European Union (apart from Greece and Portugal), Switzerland and
Norway. Today, the North, where only about 14 per cent of the world's
population live, produces almost 79 per cent of the world's output and
accounts for 75 per cent of the world's exports. 1

Thus, the spreading of the growth economy in the South not only has
failed to improve the welfare of most of the people there, but it also has led
to a dramatic widening of the North-South divide. If, for instance, we use
the typical measure that supporters of the growth economy use (i.e. the per
capita gross national product), the growing gap between the North and the
South becomes obvious. In 1978, the per capita income in the North was
40 times higher than that of the low-income countries in the South (where
about 56 per cent of the world population lives) and six-and-a-half times
higher than the per capita income of the middle-income countries in the
South (where the remaining 30 per cent of the global population lives). By
1993 the gap had drastically widened: the per capita income of the North
was almost 61 times higher than that in the low-income countries in the
South and over nine times higher than the income of the middle-income
countries. That means that within a relatively short period, the last 15
years, the North—South gap has increased by something between 34 per
cent (North-low-income countries) and 31 per cent (North-middle-
income countries)! 2

The above data imply that the system of the market economy is not
inherently capable of transforming the South's economy into a type similar
to the North's growth economy, that is, a type that produces a large
consumerist middle class which extends fully to about 40 per cent of the
population and partially to another 30 per cent (which is insecure but
definitely in a better position than the vast majority of the population in
the South). An indication of this fact are the poverty figures in the North
and the South. As regards the South, even the World Bank, not a
champion for the 'wretched of the Earth', had to admit that, in 1985, one-
third of the total population in the South was poor. On the other hand, in
3

the North the poverty figure was about 13 per cent. Thus, the average
poverty rate in the European Community (excluding Greece and Portu-
gal) was 13.6 per cent in 1985. Similarly, in the USA 13 per cent of the
4

population lived below the official poverty line in 1988 These data (the
5

most recent comparative data available) refer to the middle of the last
decade when the neoliberal consensus was not yet universal. Since then, all
indications are that the situation has changed for the worse.
This means that the famous 'trickle-down effect' (i.e. that economic
growth, in time, will generate additional national wealth that will then

112
THE GROWTH ECONOMY AND THE SOUTH

trickle down to all), even if it did (partially) work in the North, certainly
is not working in the South. As Ted Trainer points out:
[T]he 'indiscriminate growth and trickle down' approach to development has
been accompanied by significant improvements in average life expectancy,
infant mortality, literacy and GNP over the last few decades. But the
distributions of the benefits have been extremely uneven . . . A recent survey
of the literature revealed about 120 statements to the effect that development
has done little or nothing to improve the economic living standards of the
poorest 40% or more of the Third World. Hardly any statements to the
contrary were found. 6

Indicatively, 10 per cent of the population in the poorest countries of


the South take more than 33 per cent of the total income. Also, according
7

to the World Bank, one-fifth of the population in the South generally


receives, on the average, almost half the total income. And, of course, the
8

evidence of the past two decades indicates that very litde trickle-down has
ever taken place. It has been estimated, for instance (on the basis of growth
rates achieved between 1965—84, which include some of the best years of
capitalism), that it will take over 300 years for the 28 poorest countries to
rise from their present per capita average income to just half of the present
average of the rich Western countries. 9

But even in the North, the trickle-down effect has recently become
significantly weaker than in the past, not just because of the recession, but
mainly because of the intensification of the marketization process within
the neoliberal market economy, which has further widened income
inequality. This implies, as we shall see in the last section of this chapter,
that a new 'North-South' divide, cutting across the traditional boundaries
of the North and the South, has already been set into operation. In Britain,
for instance, official data from the Department of Social Security (which
for the first time included a breakdown of how all income groups fared
during the growth process of the period 1979-1991/92) are revealing
about the significance of the trickle-down effect. The poorest tenth of the
population suffered a 17 per cent fall in real income, the people in the
second decile saw no increase at all in their income, whereas the two top
deciles had an increase in real income of 46 per cent and 62 per cent
respectively. Overall, average incomes increased by 36 per cent during this
period, but 70 per cent of the population had a below average increase in
their income! 10

Of course, this does not mean that development towards a growth


economy has not taken place in the South. It certainly has. In fact, today,
a process of economic decentralization is in full swing within the world
market economy system - a process in which financial and technological

113
TOWARDS AN INCLUSIVE DEMOCRACY

factors play a crucial role. Trans-national corporations (TNCs) now have


the financial and technological capability of transferring stages within the
production process (or sometimes the production process itself) to the
South, in order to minimize production costs - particularly labour and
environmental costs. This process has already contributed significantly to
the creation of a handful of economic 'miracles' in the South which,
however, can neither be universalized nor necessarily sustained, as we shall
see in the next section.

The case of the 'economic miracles' in the South


The spectacular growth of countries like South Korea, Taiwan, Hong
Kong, Singapore, Malaysia and Thailand have given rise to a new myth-
ology, which is also adopted by parts of the self-styled 'Left': that the
capitalist growth economy has, finally, proved capable of being uni-
versalized. Some" even talk about a radical shift in global wealth and
output from the West to East Asia, if not from the North to the South.
This new myth is based mainly on the much publicized fact that the
average annual growth rate of the 'Asian Tigers' is much higher than that
of advanced capitalist countries, closing fast the gap between the two
groups of countries. And, indeed, the average growth rate of the above
countries (minus Taiwan for which the World Bank does not provide
data) was almost three times higher than that of advanced capitalist
countries in the period 1970-93. What is usually not mentioned is that,
12

apart from the exceptional cases of the small 'city-states' (Singapore and
Hong Kong), there is still a huge gap separating these countries from the
North. Thus, in 1993, the per capita income of South Korea was still one-
third, that of Malaysia one-seventh, and that of Thailand less than one-
tenth of that of advanced capitalist countries! This fact implies that, even if
the present spectacular growth rates could be sustained in the future, it will
take a very long time indeed for the gap with the advanced capitalist
countries to be closed.
But, in fact, the hypothesis about the sustainability of those growth rates
is increasingly challenged, even by orthodox economists. As recent com-
parisons of the growth of the Asian Tigers with that of metropolitan
countries during similar periods of growth have shown, the former have
mainly advanced by mobilizing hitherto underutilized human resources
and combining them with a massive employment of public and private
investment, particularly in infrastructure. In other words, the growth of
13

these countries has been mainly of the 'extensive' rather than of the
'intensive' type. The former type depends on increases in the use of
existing resources, which, at some stage, will inevitably be exhausted,
whereas the latter type, which is the only sustainable one in the long run,

114
THE GROWTH ECONOMY AND THE SOUTH

depends on improvements in productivity. As the case of the countries in


Eastern Europe has shown, the task of reproducing the growth economy
through intensive growth is much harder than that of extensive growth.
The historical experience therefore shows that the continuation of the
expansion of the Asia 'miracles' is very doubtful.
In fact, if we take into account the foundations of growth in the
'socialist' growth economy versus those in East Asia, the doubts become
even stronger. Economic growth in Eastern Europe was founded on
central planning, whereas in East Asia it has been export-led. But it was not
laissez-faire policies that induced their spectacular growth. As a number of
studies have shown, the expansion of the Asian Tigers was based on
14

massive state intervention that boosted their export sectors, by public


policies involving not only heavy protectionism but even deliberate
15

distortion of market prices to stimulate investment and trade. 16

However, such a degree of statism, as we saw in the previous two


chapters, is not possible any more in the context of today's internation-
alized market economy. This is particularly so if we take into account the
much higher dependence of growth in these countries on the com-
petitiveness of their exports than in advanced capitalist countries. Thus,
the fact that the ratio of exports to income in the Asian Tigers has increased
from an average of 53 per cent in 1970 to about 92 per cent in 1993 (versus
a rise in advanced capitalist countries from 14 per cent to 20 per cent in the
same period) is a clear indication not only of the much higher vulnerabil-
17

ity of East Asia's growth economy, compared to that of the North, but also
of the asymmetry involved. It is clear that the reproduction of the growth
economy in the Asiatic 'miracles' depends crucially on the North's
demand, whereas the opposite is not true.
So, the Asian Tigers' 'miracle' does not represent 'the end of the
Western world', as ex-Marxist social liberals argue, since its reproduction
18

crucially depends on the Western world. In fact, it seems that the view
about the end of the West is a myth, even if in the East we include Japan,
which, unlike the 'Tigers', has been one of the founder members of the
capitalist club. The Japanese miracle seems to be fading away as the long-
term growth rate of the country's per capita GNP has fallen from 9.4 per
cent in 1960—79 to 3.4 per cent in 1980-93. Furthermore, as capital seeks
19

more flexible growth economies to invest in, unemployment, which was


almost non-existent in the past, has been growing fast lately, with a rise of
over 50 per cent in the last four years alone. 20

Therefore, what the Asian Tigers do show, with their complete lack of
welfare states and civil societies, is a glimpse of the future of political and
economic democracy in the North. In an internationalized market econ-
omy, the requirements of competition homogenize not just the economy

115
TOWARDS AN INCLUSIVE DEMOCRACY

but society itself. One could therefore predict that the future of the market
economy lies in a world model which would be the synthesis of the Anglo-
Saxon liberal model with the Asian 'miracles' - a synthesis that would be
characterized by an almost non-existent civil society, accompanied by
various safety networks for the poor and expanded private health, educa-
tion and insurance sectors for those of the rest that could afford to use
them.

The growth economy and development


The fundamental question with respect to development is not why the
growth economy in the South has not been as successful as in the North,
but why the model of economy and society that was established in the
North should be considered as a universally feasible and desirable societal
model in the first place. As regards the feasibility of the model, as we saw
earlier, there are strong grounds to believe that the chances of this model
being universalized are close to nil. As regards the desirability of the model,
the historical experience of the last 200 years has shown unequivocally that
the flourishing of the market economy and its internationalization, as well
as the consequent rise of the growth economy, have led to a huge
concentration of economic power, to an ecological crisis that threatens to
develop into an eco-catastrophe, the destruction of the countryside, the
creation of monstrous mega-cities and the uprooting of local communities
and cultures. In other words, it has now become obvious that this system
of economic organization only partially, and for a small minority of the
world population, serves the objective of satisfying human needs and
improving human welfare, whereas generally it creates a new type of
hierarchical society based on economic power, competition, greed and
individualism.
However, both liberals and Marxists (including the related dependency
and regulation approaches) explicitly or implicitly adopt the ideology of
the growth economy and differ among themselves only on the question of
whether capitalism, or, instead, some kind of socialist statism, is a better
way to achieve it. Thus, these approaches, taking the feasibility and
desirability of the growth economy for granted, ignore the fundamental
issue of the power structures and relations implied by the growth econ-
omy. In other words, the conventional approaches ignore the fact that the
concentration of power, that both the capitalist and the socialist growth
economy involve, implies that the decisions about what the economic and
other needs of a society are, as well as about the ways to cover them, are
taken not by the people themselves but by elites who control the political
and economic process. No wonder that the main focus of these conven-
tional approaches is on whether a country has already achieved the status of

116
THE GROWTH ECONOMY AND THE SOUTH

a growth economy like those in the North (in which case it is classified as
an 'advanced' country), or not ('underdeveloped' or, euphemistically,
'developing'). By analogy, the quantitative expansion of an advanced
economy, measured in terms of increases in the real national income, is
defined as growth, whereas the qualitative social and economic changes
needed for its transformation into an advanced growth economy are
defined as development.
Thus, the common characteristic in all definitions of development is
that human welfare is identified with the expansion of individual con-
sumption or, generally, the unlimited development of productive forces.
For instance, a typical liberal definition defines development as 'a rise in
the present value of average (weighted) consumption per head'. Marxists
21

identify development with the development of productive forces and


define underdevelopment as a case of dominance of pre-capitalist modes of
production, a case of backwardness. Dependency theorists identify un-
22

derdevelopment with dependence, which, in turn, is defined as 'a con-


ditioning situation, in which the economies of one group of countries are
conditioned by the development and expansion of others'. Finally, the
23

new regulation school defines the 'periphery' as 'that part of the world in
which the regime of accumulation found in the most developed capitalist
countries has not been able to take root'. It is also revealing that even
24

when orthodox and radical economists discuss the need to introduce


alternative definitions and measures of development the issue of power
structures and relations is, again, set aside. This is, for instance, the case
with definitions that allow for the compositional aspects of development
(the production of what is considered development) or the distributional
aspects (the production for whom is considered development). Needs, the
ways to satisfy them, as well as whose needs are to be met in the first place,
are all issues that are supposed to be settled 'objectively' and not within an
authentic democratic process. But what is meant by Objectively' is that
these crucial problems are 'solved' either through a 'rationing by the
wallet' mechanism (market economy) or through the bureaucratic
decisions of the planners (socialist statism).
A survey of the theoretical approaches to the causes of 'underdevelop-
ment' reveals the narrow perspective taken by supporters of the growth
economy in both the orthodox and the radical economics camps.

The conventional approaches to development

The classical approaches


The origin of modern growth theory can be found in the writings of
mercantilists and physiocrats. It is not of course accidental that the problem of

117
TOWARDS AN INCLUSIVE DEMOCRACY

growth was central to eighteenth- and nineteenth-century thought, as it


was during this period that the market economy and the consequent
growth economy emerged.
Mercantilists, who aimed their analysis at the process of economic
growth in the limited sense of an increase in total output rather than in per
capita output, saw growth of the total labour force as the primary
condition of economic progress and were strong supporters of active state
intervention in promoting growth. However, since the time of the
23

physiocrats, and as the growth ideology and the ideology of the market
economy have taken hold, the focus has shifted to capital accumulation
and laissez-faire. But, whereas physiocrats see the motor of growth in
capital accumulation in agriculture, as they think that it is only in this
sector that economic surplus could be produced, liberal political econo-
mists of the classical school, since the time of Adam Smith, have assigned
this role to capital accumulation in manufacturing. This was, of course,
consistent with the requirements of the industrial revolution that set the
foundations of the modern growth economy.
Thus, Adam Smith identified the sources of growth in terms, first, of
technical progress and, second of capital accumulation. The former's
importance arises from the fact that it increases productivity and the
division of labour which, in turn, depends on the size of the market and
the rate of capital accumulation. The significance of the latter originates
in the fact that it not only provides the equipment to increase labour
productivity, but that it also creates the employment opportunities which,
in turn, determine the size of the market and the degree of division of
labour.
David Ricardo provided the finest refinement of Smith's theory and of
classical growth theory in general. Of particular importance was his
description of the process through which the pressure of an expanding
population on natural resources will eventually halt the growth process.
Although he stressed the existence of counter-tendencies (mainly in
the form of technical progress and foreign trade), which may signifi-
cantly delay the process, yet he saw the arrival of the stationary state as
inevitable.
However, it was mainly on Malthus's population principle that the
classical belief that the growth process was an inexorable movement
towards a stationary state was based. This principle was founded on the
hypothesis that the pressure created by the population expansion on a
limited stock of natural resources would eventually outrun the pace of
technical progress, especially in agriculture. So, unless the 'preventative'
checks (fewer marriages, sexual continence, etc.) could restrain this pro-
cess, the 'positive' checks (massive poverty and starvation) would be set in

118
THE GROWTH ECONOMY AND THE SOUTH

motion. Thus, the Malthusian principle established a definite causality


relationship between overpopulation and poverty, where the former was
the cause and the latter the effect. However, the explanation provided for
poverty by Malthus was based on the implicit adoption of the power
structure of the growth economy and on the explicit blaming of the poor
for their poverty. Thus, Malthus conveniently ignored the fact that it was
the requirements (in terms of cheap labour) of the emerging growth
economy which have led, with the decisive help of the enclosure move-
ment (the fencing of land that used to be common), to the creation of a
massive army of landless peasants and massive poverty. In fact, the
enclosure movement, which began in England in the twelfth century but
flourished mainly in the eighteenth and nineteenth centuries (1750—1860),
had a two-sided economic effect: on the one hand, it gave wealthy
landowners the opportunity to profit from either arable farming or raising
sheep, and on the other, it compelled many small farmers to sell their
property and move to the towns to work in the new factories.

Neo-Malthusians and the Overpopulation' myth


Similarly, today, neo-Malthusians ignore the corresponding enclosure
movement in the South, which marked the dismantling of the traditional
economies in the area, after the successful penetration of the market and
the growth economy. But, as Ted Trainer points out: '[I]n Latin
26

America 11% were landless in 1961, but by 1975 40% were . . . [Approxi-
mately 80% of all Third World agricultural land continues to be owned by
about 3 per cent of landowners.' Notwithstanding, neo-Malthusians
support the thesis, which is also adopted by some eco-fascist currents
within the Green movement, that the South's poverty should be blamed
on its Overpopulation'. Deep ecologists, as we shall see below, also adopt
the neo-Malthusian thesis and argue that overpopulation created a 'pop-
ulation bomb', which should be checked 'within an overall commitment
27

to reduce the birth-rate, especially in third world countries' - even by


28

such methods as the cutting of aid to the Third World! 29

But, let us consider the facts behind the 'overpopulation' mythology.


There is no doubt that the world population has increased rapidly in the
past two centuries. It is not, however, accidental that the acceleration of
the population growth coincides with the emergence and spreading of the
market/growth economy all over the world. Thus, world population,
which reached the 1 billion mark in the 1800s, doubled in the 1920s,
doubled again in the 1970s, and is expected to double again by the 2020s. 30

However, it is at least doubtful whether the present population trends will


continue into the next century. Within the very short time span of the last
20 years, the 'total fertility rates' (defined as the number of children that

119
TOWARDS AN INCLUSIVE DEMOCRACY

would be born to a woman if she were to live to the end of her


childbearing years and bear children at each age in accordance with
prevailing age-specific fertility rates) declined dramatically in the South.
The 'total fertility rate' was almost halved during the last 20 years in most
of the South. Thus, in 'low-income countries', where two-thirds of the
total population in the South lives, the fertility rate fell from 5.9 in 1970 to
3.6 in 1993, and in the rest of the South, this rate fell from 4.5 to 3.0. A
31

significant part of this drastic decline is due to economic and physical


violence used within the context of 'family planning' strategies which
mainly affect unwanted baby girls (China, India). Indicatively, in India,
between 1981 and 1991, the number of females per 1000 males declined
from 934 to 929, according to the latest census, whereas in advanced
capitalist countries there are 1060 females for every 1000 males. Still, the
32

expansion of contraceptive prevalence (the percentage of women using


contraception) and television propaganda have played an equally im-
portant role in this process. It is not surprising therefore that on the very
day the latest World Conference on Population and Development opened
in Cairo - with the obvious objective of forcing a reduction in the South's
fertility rates that supposedly were leading to a population explosion in the
twenty-first century — the world's leading demographers announced
(without attracting much publicity in the media) that their latest research
showed an end to rising global numbers! 33

Furthermore, it can easily be shown that it is not the lack of capacity to


produce food that causes hunger and the related diseases killing 40,000
people every day. As David Satterthwaite of the International Institute
34

for Environment and Development argues, it was 'land-owning structures


and economic processes that excluded the "hungry" from the possibility of
producing food or earning enough to buy it'. And, of course, neither the
33

depletion of resources (renewable and non-renewable) nor the degrada-


tion of the environment (manifested by such phenomena as the green-
house effect and the damage to the ozone layer) could, by any stretch of
the imagination, be blamed on population trends. Given the direct
relationship that exists between consumption standards and environmental
degradation and the fact that there is an inverse relationship between
fertility rates and consumption standards (i.e. income groups with low
fertility are usually those with high consumption levels), there is litde
doubt about the causes of the present crisis. Therefore, the concentration
of income and wealth is not only the ultimate direct cause of poverty and
starvation but, also, of the present environmental destruction; further-
more, it is the indirect cause of high fertility rates among low-income
groups. In other words, it is the growth economy itself that has to be
blamed for the present economic, ecological and demographic crisis.

120
THE GROWTH ECONOMY AND THE SOUTH

We may therefore argue that the two main approaches which formed
the backbone for the 20-year Programme of Action document approved at
the Cairo population conference are equally irrelevant. According to the
first approach, which we may call the economic development approach, the best
way to tackle the 'population problem' is economic 'development', that is,
the continued expansion of the growth economy. This approach, which is
based on the experience of the North, assumes that in a pre-industrial
economy both birth and death rates are high, keeping the population
roughly stable; as a country industrializes and living conditions (including
hygienic conditions) improve, death rates fall, leading to a high population
growth. However, the population explosion - the argument goes — is only
temporary because soon, as better education and health conditions spread,
birth rates tend to fall as well, leading to stable, moderate population
growth. This was the population pattern in the North, and a similar pattern
was expected for the South.
Still, although both death and birth rates have fallen in the South,
fertility rates in the area are almost double those prevailing in the North. In
1993, total fertility rates were 5.5 in low-income countries (3.6 including
China and India) and 3.0 in middle-income countries, versus 1.7 in the
high-income countries of the North. Furthermore, there is no serious
36

expectation that in any foreseeable future these differentials will disappear.


Today, it is almost generally accepted that overpopulation is the effect
rather than the cause of poverty - a fact that was explicitly or implicitly
accepted by those at the Cairo Conference who supported the economic
development approach. According, for instance, to Julian Simon, there is
37

not much evidence that the rise in population makes countries poorer.
Also, according to another report, the most successful population control
38

programmes in the last 25 years have been those that aimed at the decrease
in poverty. This does not, of course, mean that poverty is the only cause of
high fertility rates. Population trends depend on a multiplicity of factors:
social (family planning, use of contraceptive methods, etc.), cultural
(religion, tradition and so on), as well as economic. The main economic
factor is, of course, poverty.
Poverty, defined in a broad sense, is determined by the distribution of
income, unemployment and the quality of welfare services — especially
health and education services. It can be shown that poverty is perhaps the
most important explanatory factor of the differential fertility rates between
countries. This fact becomes obvious, even if we use as a comparative
measure of welfare the index used by the World Bank and other inter-
national institutions: the per capita income. The per capita income is, of
course, a very inadequate measure of human welfare and has rightly been
critized by radical economists of all persuasions. As a rule, however,

121
TOWARDS AN INCLUSIVE DEMOCRACY

significant differences in per capita incomes (like those reflected in the 1:61
ratio between low-income countries and high-income countries) do
reflect significant differences in poverty in the broad sense (i.e. differences
in employment, real incomes, welfare services, etc.) which, indirectly,
affect the social and cultural factors that are relevant to population trends.
Thus, a very strong correlation can be established between poverty and
fertility rates: the higher the per capita income, the lower the fertility rate.
Low-income countries (excluding China and India) with an average per
capita income of $300, have a total fertility rate of 5.5 (a decline of 15 per
cent since 1970). Middle-income countries, with an average per capita
income of $2480, have a fertility rate of 3.0 (a decline of 32 per cent since
1970), whereas high-income economies, with an average per capita
income of about $22,500, have a fertility rate of less than 1.7 (a decline of
26 per cent since 1970). Therefore, given that income and wealth
39

differentials, far from being reduced by the expansion of the growth


economy, are further enhanced and that the 'trickle-down effect' has
certainly proved invalid in the South, one may reasonably expect that the
present significant fertility differentials will persist for many years to come
- for as long as the huge income differentials remain.
The alternative to the economic development approach may be called the
social development approach. This approach, which was promoted by the
Cairo conference, emphasizes social rather than economic development
and stresses the need to 'empower women', as the key to solving the
'population problem'. However, 'empowering women' in this context
does not mean upgrading their general social position - which is anyway
impossible under the present conditions of huge concentrations of power.
It simply means, as a Green realo and prominent figure of the British
establishment put it, 'empowering women to take control of their own
fertility', by improving access (from the social, economic and hygienic
40

points of view) to contraceptives and abortions. The assumption on which


this approach is based is that contraception, not 'development', is the best
contraceptive, and that fighting poverty, as the same activist puts it, is not
a 'realistic' target for addressing the problem. However, as I argued above,
it is poverty in the broad sense that plays a critical role with respect to such
crucial factors to population trends as infant mortality, which is over nine
times as high in low-income countries compared with high-income
countries, or old-age security.
41

It is because of the obvious shortcomings of the alternate approach that


even the liberal elites find it hard to rely exclusively on it and argue that
'development is not the only contraceptive, but, without it, no amount of
condoms scattered on the pavement will help'. The same shortcomings
42

have obviously been grasped by Bill Clinton's National Security Council

122
THE GROWTH ECONOMY AND THE SOUTH

advisers who have identified the threat of peoples deprived of basic needs,
such as food, water and shelter, as One of the main engines of world
instability'. 43

Neo-classical and Marxist/dependency approaches


to development
In the last quarter of the nineteenth century, important methodological
changes in economics, introduced independently by Jevons, Menger and
Walras, started the marginalist revolution. This was not just a movement to
convert classical political economy into a 'science' of economics. The
revolution marked, also, a shift in emphasis from the problem of growth
and development to the static problem of the allocation of resources under
conditions of efficiency. Still, the world view of the neo-classical school
that emerged out of the marginalist revolution remained typically classical;
this was not of course surprising, given the expressed aim of neo-classicals
just to refine and not to replace classical economics. It was a world view of
harmony (all groups gain in the growth process), gradualism (development
occurs through small, almost continuous steps), individualism (individual
rational decisions secure a socially rational process) and laissez-faire.
Neo-classical economists though, unlike their classical predecessors,
were optimistic about the long-term prospects of capitalist economies.
They argued that technical progress would offset any natural resource
barriers, and that, even if we assumed away technical progress, it would
take a very long time for the stationary state to be reached. Thus, provided
the market is left free to ensure adequate levels of saving (by boosting
profits, through the depression of the cost of production, i.e. squeezing
real wages, environmental cost, etc.) and investment (which feeds techni-
cal progress), economic growth could continue almost indefinitely.
On the radical side, Marx's economic interpretation of history was a
perfect example of Euro-centrism; his criteria for assessing non-European
societies were determined by the European experience and the ideology of
the growth economy. Marx himself, not unlike the orthodox social
scientists, identified progress and civilization with the unlimited develop-
ment of productive forces ('the bourgeoisie, by the rapid improvement of
all instruments of production, by the immensely facilitated means of
communication, draws all, even the most barbarian nations, into civil-
isation'). Furthermore, the adoption of the growth ideology led him to
44

dismiss all non-European forms of society under the blanket designation of


'a mere geographic terminology of the "Asiatic mode of production"
which appears static, unchanging and totally non-dialectical'. On the
45

other hand, capitalism was seen as a dynamic system tending to generate


economic development endogenously, through competition between

123
TOWARDS AN INCLUSIVE DEMOCRACY

capitals. Thus, the emergence of capitalism in a few metropolitan centres


generates capital accumulation and development and opens up an initial
lead over the rest of the world. Then, the dynamics of competition force
capital to seek new methods of production, new markets, new sources of
supply, etc., and set in motion forces leading to expansion, accumulation
and economic development in the areas penetrated by capitalism. Capital,
according to Marx, is going to create 'a world after its own image'. The
46

inevitable outcome of this process is the geographic spreading of the


system, the internationalization of capital.
However, whereas orthodox social scientists saw the growth process
within the context of a world view of harmony, gradualism, equilibrium
tendencies and evolutionary change, Marx — through a dialectical analysis
of social change — saw the same process within the context of a world view
of conflict, contradictory forces and eventual revolution that would
substitute the working class for the bourgeois class as the social agents of
development. Still, for Marx, the fundamental contradiction in capitalism
is found in the social character of modern production and the private
appropriation of the economic surplus, rather than in the fact that eco-
nomic growth itself necessarily leads to concentration of economic power
and the destruction of the environment. In other words, the Marxist
critique focuses its attention exclusively on the market economy and never
touches the growth economy itself.
The post-war theories of 'development' were designed with the explicit
aim of dealing with the problems created by the worldwide spreading of
the growth economy of the North. These theories may be classified as
either 'orthodox' or 'radical', the former denoting all development ap-
proaches belonging to the orthodox paradigm and the latter all those
approaches belonging to the Marxist and dependency paradigms.
The orthodox paradigm includes all development theories in which the
market economy is taken for granted and a world view of harmony is
adopted, within an evolutionist process. Orthodox economic approaches
to development may be broadly classified as 'neo-classical' and 'structural-
ist'. The so-called structuralist approaches to development (which are
associated with the names of Paul Rosestein-Rodan, Ragnar Nurkse,
Arthur Lewis, Hollis Chenery, Gunnar Myrdal and others) adopt
Keynesian statism, whereas neo-classical approaches emphasize the role of
free markets. Structuralists, like neo-classical economists, take the market
economy for granted and use the traditional tools of orthodox economics
in an attempt to show the existence of a process leading from a traditional,
rural, underdeveloped economy to a modern, industrial one. But, unlike
neo-classical economists, structuralists emphasize the role of structural
rigidities and disequilibria in the transitional process towards a growth

124
THE GROWTH ECONOMY AND THE SOUTH

economy. Structuralists are, therefore, in favour of administrative action,


and it is no wonder that their approach to development was very much in
fashion during the statist phase of the marketization process. Similarly, it is
not surprising that neo-classical approaches to development have come
back into fashion with the present flourishing of neoliberalism, and that
they have been aggressively promoted by the World Bank and the
International Monetary Fund. The special World Bank report to mark its
50th birthday, for instance, is indicative of the 'new' orthodoxy in
development: 'A new paradigm has emerged, one that emphasizes
"market-friendly" approaches.' 47

Radical approaches to development belong to the two main paradigms


developed during the post-war period, that is, the Marxist and the
dependency paradigms. The Marxist paradigm includes all those theories
which adopt a world view of capitalism as a historical phase in the process
of social evolution. In this problematic, development is primarily deter-
mined by each country's internal structure and specifically by the nature of
the dominant mode of production (i.e. the forces and relations of production).
In this context, underdevelopment is seen as a remnant of the past, as a pre-
capitalist mode of production.
The dependency paradigm was developed in the post-war period, as a
response to the failure of capitalist development in the Third World. It
was, in fact, a theoretical reaction to the inability of both orthodox
economics and classical Marxist theories of imperialism to explain this
failure. This paradigm includes all those theories in which underdevelop-
ment is seen as the outcome of specific power relations within the context
of a world system. The dependency theories share with Marxist theories a
world view of conflicting interests, instead of one of harmony, as in
orthodox development approaches; a historical view of capitalist develop-
ment, instead of the typical a-historical orthodox analysis; and finally, they
adopt an internationalist approach emphasizing the integral nature of the
world economy, instead of following the usual orthodox approach of
concentrating on nation-states as the fundamental units of analysis.
However, the differences between the Marxist and the dependency
approaches at the methodological, theoretical and political levels are
equally important. The methodological differences refer to the fact that
the central category in Marxist theory is that of the mode of production,
whereas in dependency theories this role is played by the 'world-system'
concept. Thus, capitalism is seen in the former within the context of class
analysis, whereas in the latter it is seen within the conceptual framework of
production for profit, in a world system of exchange and exploitation of
some areas by others. This implies that the class structure (as well as
125
TOWARDS AN INCLUSIVE DEMOCRACY

underdevelopment) is the consequence of dependency relations, rather


than the main determining cause, as in Marxist analysis.
Also, from the historical point of view, a crucial difference arises
regarding the nature of the historical role of capitalism. Marxists assume
that the role of capitalism in the development process is progressive and see
capital accumulation as a process of continuous expansion. On the other
hand, dependency theorists do not consider the historical role of capitalism
as necessarily progressive; they see capital accumulation as a system of
transferring the economic surplus from the periphery to the centre, rather
than as one of continuous expansion. The implication is that Marxists see
underdevelopment as a state of a pre-capitalist mode of production, as an
earlier historical stage, whereas dependency theorists see it as the result of
the imposition of a particular division of labour pattern on the periphery,
that is, as the result of integration in the world system in a subordinate
position. Finally, from the political point of view, whereas for orthodox
Marxists development is not impossible within the capitalist system, since
the expansion of capitalist relations could set the preconditions for a
socialist revolution, for dependency theorists, development presupposes a
break with the world-capitalist system.
Nevertheless, despite the significant differences between Marxists and
dependency theorists, they all share a fundamental common characteristic:
like orthodox social scientists, they never dispute the desirability of the
growth economy itself, that is, of the unlimited development of pro-
ductive forces. In fact, the main point of controversy in the famous debates
(which raged in the 1970s) between Marxists, neo-Marxists and depend-
ency theorists centres on one issue: why the growth economy in the South
has not been as successful as in the North: in other words, why growth has
not been rapid enough. In short, all the above approaches never blame the
capitalist (or the socialist) growth economy as bound to lead to a huge
concentration of economic power and the destruction of self-reliant
economies. Nor do they ever stress that the growth economy, by under-
mining eco-communities, is the crucial cause of irreparable ecological
damage. In a nutshell, they never criticize the system of the market
economy for attempting to create a universal growth economy; instead,
they criticize it for not doing so efficiently enough!
Thus, the main objective of radical theories has been to show the
process through which the economic surplus of the South is transferred
48

to the North and how this process arrests the development of a successful
growth economy in the former. The transfer process can be shown either
within the theoretical framework of a chain of metropolis-satellite rela-
tions linking the international, national and local capitalist systems, or
49

within the context of a world system whose components (nation-states)

126
THE GROWTH ECONOMY AND THE SOUTH

are not closed systems, but integral parts of a totality characterized by a


single division of labour. The mechanism itself, through which the
50

transfer of surplus takes place, is based either on the unequal exchange


resulting from significant wage differentials between the North and the
South, or on the unequal specialization resulting from corresponding
31

productivity differentials.32

Finally, the neo-Marxist 'modes of production' approach, that was


33

developed as a response to the 'unorthodox' dependency theories, exam-


ines the transitional process leading to a growth economy as a process of
articulation of modes of production (capitalist and pre-capitalist ones)
within a social formation. Again, not only is the desirability of the growth
economy not disputed, but even its eventual universalization is taken for
granted.

The regulation approach to development


Similar considerations apply with respect to the regulation approach, 34

which is currently fashionable among neo-Marxists, post-Marxists, ex-


Marxists and others. Alain Lipietz provides a typical example of the
33

regulation approach to development - an approach that no one would


deny represents a definite step forward as far as Marxist methodology is
concerned. This is particularly true with respect to the regulationists'
rejection of the crude functionalism that characterized some theories of
imperialism and dependency. For instance, few would deny today the
invalidity of propositions — central to the argument of many theories of
imperialism and dependency — which asserted that the function of the
periphery was to promote growth in the centre, through the various
mechanisms of transfer of value from the periphery.
However, the regulation approach, like the neo-Marxist and depend-
ency approaches, also aims to explain why the regime of accumulation
found in the most developed capitalist countries did not grow roots in the
South. In other words, the objective is, again, to answer the question as to
whether a relatively independent capitalist development is possible in the
periphery, so that the growth economy of the North can be transferred to
the South, as predicted by classical Marxist theory. Thus, the desirability of
'independent capitalist development' is, again, taken for granted, and the
only issue under discussion is the feasibility of reproducing it in the
South.
This feasibility, according to the regulation approach, depends on
internal class alliances: 'The development of capitalism in any given
country is primarily the outcome of internal class struggles which result in
embryonic regimes of accumulation being consolidated by forms of
regulation that are backed up by the local state.' This way, the regulation
36

127
TOWARDS AN INCLUSIVE DEMOCRACY

approach ends up by explicitly assuming that the huge concentration of


economic power in the North is just the outcome of class struggles and
alliances and the resulting role of the state; implicitly, the same is true
regarding the concentration of power within the North and the South, as
well as the consequent ecological damage. So, the actual 'International
Division of Labour', which involves the unequal allocation between
various countries of world labour and its products, is described as 'simply
the outcome of various nations' attempts to control one another or to
escape one another's control, of one or another class alliance's unremitting
efforts to achieve or surrender national autonomy'. 57

The implication is that the direct relationship between the grow-or-die


dynamic of the market economy and the resulting concentration of
economic power and ecological damage is simply relegated to 'the pri-
macy of internal causes'; this is a position not very dissimilar to the liberal
position, according to which it is not the market economy itself that has to
be blamed for the misery and starvation in the South but its corrupt elites!
Thus, it is simply ignored that the market economy and the consequent
growth economy have a dynamic of their own, and that the marketization
process and the parallel process of spreading the growth economy inevit-
ably lead to the concentration of economic power and serious ecological
damage. The implicit conclusion, which is promoted by the regulation
approach, is that the state (at the centre, or the periphery) is capable of
effectively controlling the market, even to the extent of creating, under
certain conditions, 'independent capitalist development'; this is so because
the state is 'the archetypal form of regulation [since] it is at the level of the
state that the class struggle is resolved'. All this, at the very moment when
58

the internationalization of the market economy and the consequent


withering away of the economic role of the nation-state is in full swing!
In conclusion, the problem with conventional theories of development
(orthodox and Marxist paradigms) is that their problematic originated in
the logic of the growth economy. Within this problematic, the issue of
development is discussed in terms of the reasons why the countries in the
South did not develop a growth economy similar to the one developed in
the North. However, the type of approach needed to examine economic
relations between the North and the South, and economic relations in
general, is one that examines such relations in terms of power structures,
rather than on the basis of 'objective economic laws', or 'general theories',
Marxist or not. Therefore, the role of states and ruling elites (a 'subjective'
element) is, indeed, important in this sort of analysis. But the role of the
institutional framework, in the form of the market economy/growth
economy (an 'objective' element) is equally important because it sets the
'degrees of freedom' that are available to the state and the ruling elites.

128
THE GROWTH ECONOMY AND THE SOUTH

However, it seems that the regulation school, in its effort to throw away
the Marxist 'objectivist baggage' (although, despite the rhetoric, this
school does look just one more sophisticated attempt to develop a new
'general theory') has moved to the other extreme of almost ignoring the
constraints imposed on the role of the state by the institutional frame-
work!

The ecological dimension of development


In the 1980s, the appearance of the ecological crisis at the forefront added
a new dimension to the development debate - a debate which up to then
was just focused on the feasibility of reproducing the growth economy of
the North in the South. The question of the ecological implications of
development and implicitly the desirability of the growth economy itself
became crucial. In the following, the orthodox economics approach to the
ecological implications of development in the South will be discussed,
whereas the general ecological approaches to growth/development in
both the North and the South will be examined in Chapter 4.
For orthodox economists, the issue is whether 'development' is the
cause of environmental damage, or whether it is the lack of development
that is causing environmental problems. The World Bank has decided that
some problems are associated with the lack of economic development; it
specifically mentions inadequate sanitation and clean water, as well as
indoor air pollution from biomass burning and many types of land
degradation in the South as having poverty as their root cause. On the
other hand, the same source argues: 'Many other problems are exacerbated
by the growth of economic activity: industrial and energy-related pollu-
tion (local and global), deforestation caused by commercial logging and
overuse of water.' 59

Not surprisingly — in view of the fact that it is, after all, the proceeds of
the ruling economic oligarchies from the functioning of the market
economy that finance the activities of the World Bank and the salaries of
its executives that draw up the relevant reports - the solutions suggested by
the World Bank for both types of problems are consistent with the aim of
maintaining and reproducing the existing institutional framework of the
market economy. Thus, the proposed solution to the environmental
problems is 'more development', but of a type that will not fail to 'take into
account the value of the environment', so that a better trade-off between
development and environmental quality is achieved. So, the environment
is assumed to be something that can be 'valued', in a similar way that
everything else is assigned a value within the market economy.
However, apart from the fact that there is no way to put an 'objective'
value on most of the elements that constitute the environment (since they

129
TOWARDS AN INCLUSIVE DEMOCRACY

affect a subjective factor par excellence, i.e. the quality of life), the solution
suggested, in effect, implies the extension of the marketization process to
the environment itself. In other words, it implies the assignment of a
market value to the environment (even if it is in the form of an imputed
value), so that the effects of growth on it are 'internalized', either through
the creation of new profitable 'green' business activities, or through
'corrective' state action on the workings of the market mechanism! Thus,
not only is it conveniently ignored that it is the market mechanism itself
which is the problem, because from the moment it incorporated an
important part of the environment — land — it initiated the eco-damaging
process, but it is also recommended that the marketization process has to
be extended to the other parts of the environment (air, water, etc.) as well!
The outcome of such a process is easily predictable: the environment will
either be put under the control of the economic elites that control the
market economy (if an actual market value can be assigned to it) or the
state (if only an imputed value is possible). In either case, not only is the
arrest of the ecological damage - at least - doubtful, but, also, the control
over Nature by elites who aim to dominate it - using 'green' prescriptions
this time — is perpetuated.
Furthermore, on the basis of all existing evidence, it is hard to reject the
proposition that it is, mainly, poverty as development (i.e. poverty caused by
development) that is causing the environmental degradation and not
poverty as underdevelopment. This is particularly so, if we allow for the fact
that it is the consumerist lifestyles of the rich that are causing environ-
mental degradation rather than those of the poor. Thus, the 'Group of 7'
richest capitalist countries in the world, where 12 per cent of the world
population lives, is the cause of 38 per cent of global carbon dioxide
emissions. Still, the World Bank finds nothing wrong with the lifestyles
60

of the rich and argues that:


[F]or natural resources that are non-renewable, increases in consumption
necessarily imply a reduction in the available stock. The evidence, however,
gives no support to the hypothesis that marketed non-renewable resources
such as metals, minerals and energy are becoming scarcer in the economic
sense. This is because potential or actual shortages are reflected in rising
market prices, which in turn have induced new discoveries, improvements in
efficiency, possibilities for substitution, and technological innovations. 61

Thus, the World Bank implicitly adopts the hypothesis we made earlier
that concentration is not only a consequence but also a fundamental
precondition for the reproduction of the growth economy. Thus, in the
transitional period, 'rising market prices' would simply function as crude
rationing devices which would benefit the privileged social groups. Also,

130
THE GROWTH ECONOMY AND THE SOUTH

even if rising market prices are followed by technological innovations,


etc., it is at least doubtful whether the non-privileged social groups will be
in a position to exploit them. It is therefore obvious that the World Bank
simply celebrates the 'allocation by the wallet' of those global resources
that are becoming scarce because of growth. Furthermore, there is no
evidence that the new technologies, which are 'induced by higher prices',
lead to some kind of 'sustainable growth'. In fact, the opposite might be
the case. The UN Food and Agriculture Organization, for instance, states
that 'Low-input production is probably the most environmentally-
friendly system and has been practised since time immemorial; still, during
the development process, every country has abandoned this practice
because of its low productivity and its inability to meet the food require-
ments of an ever increasing population.' Inevitably, the abandonment of
62

this practice has meant the creation of farmers' dependency on chemical


companies. Furthermore, farmers, to finance the purchase of chemicals,
usually produced by trans-nationals, become dependent on export crops.

Democracy and development

Towards a new 'North-South' divide


In the context of today's neohberal internationalized market economy, it
is doubtful whether the old distinction between North and South makes
much sense any more. If, for instance, we use the familiar — and almost
meaningless - per capita GNP indicator to classify countries in the North-
South divide, we ignore the fact that the rapidly widening gap between
privileged and non-privileged social groups has already reproduced huge
'South' enclaves in the heart of the North. For instance, in Britain,
between 1979 and 1993, poverty increased from 8 per cent to 24 per cent
among couples with young children and from 19 to 58 per cent among
lone-parent families. Also, if we use alternative indicators concerning the
63

degree to which essential needs are covered for various segments of the
population, irrespective of whether they live in the 'North' or the 'South',
the question arises as to which group a country like the USA belongs to
when one in five US children live in poverty and eight million of those
children lack health care. Similarly, according to a UNICEF report, 64

compared to their per capita income, the USA and Belgium in the 'North'
perform far worse in child survival, nutrition and education than Jordan,
Syria, Poland, Romania, Bulgaria and Kenya in the 'South'. Furthermore,
according to the same report, if we rank the countries of the world in terms
of the well-being of their people — and particularly children - then, at the
top of the list we find such countries as Vietnam, Sri Lanka, Nepal, Cuba
and Burma (Myanmar), which have far lower infant mortality rates and

131
TOWARDS AN INCLUSIVE DEMOCRACY

better records of junior school attendance than would be expected from


their per capita GNP.
The above discussion raises not only the issue of whether the old
distinction between 'North' and 'South' makes sense; it also raises the issue
of the indicator itself that can be used for such a classification. In particular,
the question arises whether it is feasible or desirable to develop a common
indicator to classify countries with very different cultural and economic
needs. A common indicator, even a complex one, implies not only the
same economic and cultural needs but also that societies could be classified,
on the basis of it, in a hierarchical order that justifies the use of similar
means, the same 'experts', aid, etc., so that those at the bottom could reach
those at the top. Furthermore, a common indicator implies that the
'development' achieved in the countries at the top is desirable, whereas
alternative models of need satisfaction should be avoided; in other words,
it implies common values. Thus, for example, when modern agribusiness
maximizes output of a single crop through monoculture and, as a result,
productivity improves and competitiveness increases, then this becomes an
obviously preferable method of farming to expand per capita GNP, even
if it is eroding biodiversity.
However, despite the obvious problems of measurement involved, it
may still be useful to keep the 'North—South' distinction, provided that we
redefine our terms. Thus, the 'New North' could be defined as all those
social groups that benefit from the marketization process, whether they
live in the old North or South. In general, we may say that this New
63

North consists of the '40 per cent society' in the old First World and a small
minority in the old Second and Third Worlds. In the old First World, the
beneficiaries from the marketization process do not just include those in
control of the means of production, which constitute the bulk of the ruling
elite, but also the large middle classes that have flourished in this process
(professionals, skilled workers, etc.). Similarly, in the old Third World the
beneficiaries include not just the ruling elites (big landowners, importers
and so on), but also a rudimentary middle class of professionals, top state
employees, etc. Finally, in the old Second World the beneficiaries include
the new ruling elite, which has been emerging in the marketization
process (usually ex-members of the old party nomenclatura) and a very
small middle class of professionals.

Development or democracy?
Today, increasing numbers of people do not have access to the political
process (except as voters), to the economic process (except as consumers)
or to the environment (except as conditioned by their roles in the
economic and political process, defined by the market economy and

132
THE GROWTH ECONOMY AND THE SOUTH

the parliamentary system respectively). Thus, at the political level, it


is the elites of professional politicians who take all significant political
decisions. Similarly, at the economic level, what is produced in a country
is not determined by the democratic decisions of its citizens but by
property relations and the income distribution pattern. Finally, the sort of
'protection' the environment is entitled to have is effectively determined
by the political and economic elites which control the market/growth
economy. Moreover, a process leading to the further concentration of
power at all levels is in full swing.
The reaction to this state of affairs usually takes two forms. On the one
hand, as their environments are destroyed or degraded, their power eroded
or denied and their communities threatened, millions are now demanding
a halt to the kind of development associated with the growth economy. As
the social activist Gustavo Esteva writes: '[i]f you live in Rao or Mexico
City you need to be very rich or stupid not to notice that development
stinks'. On the other hand, a whole series of recent initiatives and
66

struggles has developed in both the South and the North, which represent,
in their many and various ways, 'attempts by local people to reclaim the
political process and to re-root it within the local community. The central
demand made by group after group is for authority to be vested in
the community - not the state, local government, the market or the
local landlord, but those who rely on the local commons for their
livelihood'. 67

These attempts, in effect, express an understanding — which is some-


times subconscious — that it is the institutional framework itself, in other
words, the market economy and the liberal nation-state, which alienates
people from the political and economic process. The market economy, as
we have seen in Chapter 1, did not arise through some kind of 'automatic'
mechanism in Europe, but through the crucial role played by the nation-
state. Similarly, the penetration of the system of the market economy in
the South (i.e. its economic integration within the world market economy
system) was also 'a result of a conscious and often violent intervention by
the government'. In fact, it could be argued that it was the spreading of
68

the growth economy in the South that has led to the global reproduction
of the power pattern that characterizes the capitalist growth economy. In
other words, it is the lack of control over domestic resources by the vast
majority of the population, because of the lack of political and economic
democracy, which is the ultimate cause of the kind of 'development'
taking place in the South.
In this problematic, it is neither colonial exploitation — which, however,
played a significant role in the violent destruction of the economic self-
reliance of many countries - nor simply the corruption of elites in the

133
TOWARDS AN INCLUSIVE DEMOCRACY

South or the conspiracies of those in the North that have led to the failure
of the growth economy in the South. Contrary to classical Marxist
thought, which saw colonialism as a 'necessary evil' because it contributed
to the development of capitalism in the periphery, I would argue that the
69

fundamental cause of this failure is an inherent contradiction in the process


of spreading the growth economy.
The growth economy can only survive through its continual reproduc-
tion and extension to new areas of economic activity. One way to achieve
this is through the creation of new areas of economic activity, as a result,
mainly, of technological changes, in mature growth economies. A second
way is through a process of geographical expansion that, in fact, implies the
destruction of the economic self-reliance of every community on earth.
But, from the moment economic self-reliance is destroyed, either vio-
lently (colonialism), or through the market, and, as a result, two parties
with unequal economic power (in terms of productivity, technology and
income differentials) come in direct economic contact, then the automatic
functioning of the market mechanism secures the reproduction and
extension of inequality between the two parties. The essence, therefore, of
the South's failure lies in the hugely uneven control over incomes and
productive resources, which inevitably follows the establishment of a
market/growth economy. It can easily be shown that in a market econ-
omy system, dominated by the growth ideology and personal greed,
'maldevelopment' is a matter of the automatic functioning of the system
itself, since it is the purchasing power of the high income groups in the
North and of the elites in the South that determines what, how and for whom
to produce. In other words, what is true for a 'domestic' market/growth
70

economy, which, barring any effective social control of the market forces,
can only be grounded on inequality in the distribution of economic power
and unevenness in the development of various economic sectors, is equally
(if not more) true for an internationalized market/growth economy.
From this perspective, it is surprising to see important theoreticians in
the autonomy tradition adopt the view that the basic cause for the non-
'development' of the South has been the fact that
this extraordinary spreading of the West had to face societies with completely
different imaginary institutions which, as a result, have created anthropo-
logical types of a very different type than the type of the Western citizen, as
described by the Declaration of Human Rights, or the type of the industrial
worker and entrepreneur. 71

It is obvious that such an approach ignores the catastrophic impact of the


spreading of the market economy and the subsequent growth economy on
the self-reliant communities of the South and, in effect, exonerates the

134
THE GROWTH ECONOMY AND THE SOUTH

system of the market economy itself, in order to blame the 'imaginary


significations' that developed in the South! No wonder that in this
problematic the way out of the present global crisis can only emerge in the
West (Ί think that only a new development of the liberation movement in
the West could change the parameters of the problem, i.e. could in some
way ease the penetration - at least up to the point required - of the
traditional institutions and traditional religious imaginary significations
that today are dominant in most of the countries of the Third World'). 72

It is clear that this approach confuses the causes of the failure of the
growth economy to spread to the South with the causes of the South's
present predicament. Although it is true that 'traditional institutions and
traditional religious imaginary significations' are significant explanatory
factors for the failure of the spreading of the growth economy into the
South, the present situation in the South is exclusively due to the
penetration of their traditional economies and societies by the market/
growth economy of the North. Had the traditional structures of the South
not been penetrated by the North's market economy, the former might
have developed into a very different kind of world than it is today. A
different world, but not the world of a failed growth economy, with all the
unevenness, inequality, individualism and greed that characterize it.
Finally, the above discussion of development in terms of democracy
should not be confused with the currently fashionable trend in the North
(as Andre Gunder Frank points out) of moving from the massive support
73

of 'development' in the past, to the support (even backed by military


invasions — see the recent US invasion in Haiti) of'democracy' now. It is
clear that 'development' and 'democracy' are used by the North as
ideologies, in the sense of the 'objective' justification of the status quo.
Thus, in the same way that the ideologies of the market economy and
export-led growth were used in the past to justify the 'development' that
was going on in the Third World, today it is the ideology of liberal
democracy that is called to play the same role. In this context, the
economic oligarchy of the 500 trans-national corporations (TNCs) which
control the world economy (70 per cent of world trade, 80 per cent of
foreign investment and 30 per cent of world GDP) is presented as a
74

'market democracy', that is, a kind of economic democracy, whereas the


control of the political process by political elites is presented as a political
democracy. Together, free market and liberal democracy are 'fashionably
identified as though they were inseparable if not indistinguishable', 73

ignoring the fact that, although TNCs are nationally based, still, they are
not committed to any given community but to their worldwide networks.
Therefore, both democracy and the environment are easily expendable in
their calculations.

135
TOWARDS AN INCLUSIVE DEMOCRACY

To conclude, what is needed is the development of a new approach that


aims at the self-determination of individuals and communities, at the
economic, social and political levels. Such an approach should be based on
the formation of new political, economic and social structures that secure
citizens' control over their own resources. Human needs do not have to be
conditioned and infinitely expanded by a growth-oriented system; they
could therefore be constantly adjusted and limited by the community
itself. Furthermore, the needs of the significant part of the population that
belongs to the non-privileged social strata in the North do not differ
significantly from the needs of most of the population in the South. The
problem therefore is how the 'New South', that is, the non-privileged
social groups in the North and the South which constitute the vast
majority of the world population, would force the 'New North', in other
words, the small (but powerful, because of its monopolization of all
effective means of power) minority, to realize the simple fact that the
fundamental cause of the present economic, ecological and social crisis is
the oligarchic political and economic structures that secure the main­
tenance and reproduction of its privileges.
The problem of 'development' is not therefore one of how the South
could install a properly functioning market/growth economy, as the
conventional approaches to development assert. It is not even a problem of
how the growth economy could be replaced by a 'steady-state economy',
as deep ecologists and others (usually belonging to the 'New North')
argue. The problem is how a new inclusive democracy could determine
collectively the basic needs of the population and find ways to meet them
that minimize harm to the natural world.

Notes
1. Data calculated from the World Bank's World Development Report 1995
(Oxford: Oxford University Press, 1995), Tables 1, 3, 13.
2. Data calculated from the World Bank's World Developtnent Report 1995,
1980, Table 1.
3. World Bank, Poverty: World Development Report 1990 (Washington, DC:
World Bank), p. 28.
4. Eurostat, Poverty in Figures (Luxembourg: Office for Official Publications of
the European Communities, 1990), Table B7.
5. Worldwatch, Poverty and the Environment (Washington, DC: Worldwatch
Institute, 1989), p. 24.
6. Ted Trainer, Ά rejection of the Brundtland Report', IFDA Dossier 77 (May-
June 1990), pp. 77-8.
7. Ted Trainer, Developed to Death (London: Green Print, 1989), p. 9.
8. World Development Report 1992 (World Bank), Table 30.
9. Ted Trainer, Developed to Death, p. 39.
10. Households Below Average Income (London: HMSO, 1994).

136
T H E G R O W T H E C O N O M Y AND THE S O U T H

11. The Economist (1 October 1994) (quoted by Paul Hirst and Grahame
Thompson, Globalization in Question (London: Polity Press 1996), p. 99).
12. The average annual growth rate in South Korea, Hong Kong, Singapore,
Malaysia and Thailand was about 8 per cent in 1970-93, versus 3 per cent in
high income OECD countries (data calculated on the basis of the World
Bank's World Development Report 1995).
13. See, for instance, A. Young, 'Lessons from the East Asian NICs: a contrarian
view', European Economic Review, Vol. 38, Nos 3/4 (April 1994), pp. 964-73;
and Paul Krugman, 'The myth of Asia's miracle', Foreign Affairs (Nov.-Dec.
1994), pp. 65-73.
14. 'D. Rodrick emphasizes the crucial role of the governments in these
countries in engineering a rise in investment: this involved a range of strategic
interventionary measures including investment subsidies, administrative
guidance and the use of public enterprises' (quoted by Paul Hirst and
Grahame Thompson, Globalization in Question, p. 114). See also Robert
Pollin and Diana Alarcon, 'Debt crisis, accumulation and economic re-
structuring in Latin America', International Review of Applied Economics, Vol.
2, No. 2 (June 1988); and Takis Fotopoulos, 'Economic restructuring and
the debt problem: the Greek case', International Review of Applied Economics,
Vol. 6, No. 1 (1992).
15. 'South Korea has been a protectionist island in the hegemonic free trade sea
since the 1940s . . . it has had particularly strong neo-mercantilist tendencies
since the early 1970s', Bruce Cumings: 'The abortive abertura: South Korea
in the light of Latin American experience', New Left Review, No. 173 (Jan.-
Feb. 1989), p. 13.
16. See A.H. Amsden, Asia's Next Giant: South Korea and Late Industrialization
(Oxford: Oxford University Press, 1989), Ch. 6.
17. World Bank, World Development Report 1995, Table 9.
18. Martin Jacques, 'The end of the Western world', BBC2, 12 and 19 May
1996.
19. World Bank, World Development Report 1981 and 1995, Table 1.
20. Japanese unemployment rose from 2.1 per cent of the labour force in 1991 to
3.1 per cent in 1995, and it is forecast to rise to 3.4 per cent in 1996, OECD,
Economic Outlook (December 1995).
21. Ian M.D. Little, Economic Development: Theory, Policy and International Rela-
tions (New York: Basic Books, 1982), p. 6.
22. Anthony Brewer, Marxist Theories of Imperialism: A Critical Survey (London:
Routledge & Kegan Paul, 1980), p. 18.
23. T. Dos Santos, 'The crisis of development theory and the problem of
dependence in Latin America' in Underdevelopment and Development, Henry
Bernstein (ed.) (Harmondsworth: Penguin, 1973), p. 76.
24. Alain Lipietz, Miracles and Mirages (London: Verso, 1987), pp. 29-30.
25. See, e.g., Phyllis Deane, The Evolution of Economic Ideas (Cambridge: Cam-
bridge University Press, 1978), Ch. 3.
26. Ted Trainer, Developed to Death, p. 17. For further evidence about the
enclosure movement in the South during the colonial and post-colonial
period, see The Ecologist, Vol. 22, No. 4 (July-Aug. 1992).
27. Paul Ehrlich, The Population Bomb (New York: Simon & Schuster, 1990).
28. Bill Devall, Simple in Means, Rich in Ends: Practising Deep Ecology (London:
Green Print, 1990), p. 16. Similarly, Arne Naess, the father of deep ecology,

137
TOWARDS AN INCLUSIVE DEMOCRACY

stresses that 'the flourishing of non-human life requires such a decrease' (of
the human population); Arne Naess, 'Deep ecology and ultimate premises',
reprinted from The Ecologist in Society and Nature, Vol. 1, No. 2 (1992) p.
114.
29. For a comprehensive critique of the neo-Malthusian trends within the Green
movement, see Murray Bookchin, 'The population myth' in Which Way for
the Ecology Movement? (Edinburgh: AK Press, 1994).
30. World Bank, World Development Report 1995, Table 25; and Whitaker's
Almanack 1991.
31. World Bank, World Development Report 1995, Table 26.
32. The Guardian (11 Jan. 1996). Similarly, a TV documentary in UK, that caused
a lot of stir, documented the brutal tactics used in Chinese orphanages to get
rid of thousands of unwanted, mainly female, babies, within the context of
the Chinese 'one child' population policy; Channel 4, 'Dying rooms' (9 Jan.
1996). See, also, Human Rights Watch/Asia (HRWA), Death by Default
(1995).
33. International Union for the Scientific Study of Population (IUSSP), quoted
in The Guardian (5 Sept. 1994).
34. Washington Post/The Guardian (9 June 1994).
35. The Guardian (2 Sept. 1994).
36. World Development Report 1995, Table 26.
37. US National Academy of Sciences Report (Washington, DC: US Government
Printing Office, 1986).
38. The Guardian, 29 April 1992.
39. World Bank, World Development Report 1995, Table 26.
40. Jonathon Porritt, 'Birth of a new world order', The Guardian (2 Sept.
1994).
41. In 1993, the infant mortality rate (per 1000 live births) was 64 in low-income
countries (89, if we exclude China and India) versus seven in high-income
countries. The corresponding rates for those children under five were 103
(144 excluding China and India) versus nine! World Development Report 1995,
Table 27.
42. Editorial in The Guardian (3 Sept. 1994).
43. The Observer (4 Sept. 1994).
44. Karl Marx and Friedrich Engels, Manifesto of the Communist Party (Moscow:
Progress Publishers, 1952), p. 46.
45. Shlomo Avineri (ed.), Karl Marx on Colonialism and Modernization (New
York: Anchor Books, 1969), pp. 5-6.
46. Karl Marx, The Revolutions of 1848 (Harmondsworth: Penguin, 1973),
p. 71.
47. The World Bank Group, Leaming from the Past: Embracing the Future (Wash-
ington, DC: World Bank, 19 July 1994).
48. For a definition of the economic surplus see Paul A. Baran, The Political
Economy of Growth (New York: Modern Reader, 1957), Ch. 2.
49. See Andre Gunder Frank, Capitalism and Underdevelopment in Latin America
(New York: Modem Reader, 1967, 1969).
50. See Immanuel Wallerstein, The Modern World System (New York: Academic
Press, 1974), and The Capitalist World Economy (Cambridge: Cambridge
University Press, 1979).

138
THE GROWTH ECONOMY AND THE SOUTH

51. Arghiri Emmanuel, Unequal Exchange, A Study of the Imperialism of Trade


(New York: Monthly Review Press, 1972).
52. See Samir Amin, Accumulation on a World Scale (New York: Monthly Review
Press, 1974).
53. See, for instance, John G. Taylor, From Modernization to Modes of Production,
A Critique of the Sociologies of Development and Underdevelopment (London:
Macmillan, 1979).
54. For an introduction to the regulation approach in general, see Robert Boyer,
La theorie de la regulation (Paris: Editions La Decouverte, 1986).
55. Alain Lipietz, Miracles and Mirages.
56. Alain Lipietz, Miracles and Mirages, p. 19.
57. Alain Lipietz, Miracles and Mirages, pp. 25-6.
58. Alain Lipietz, Miracles and Mirages, p. 19.
59. World Bank, Development and the Environment (Oxford: Oxford University
Press, 1992), p. 7.
60. Data calculated on the basis of the World Development Report 1994; and
Richard Douthwaite, The Growth Illusion (Bideford, Devon: Green Books,
1992), p. 195.
61. World Bank, Development and the Environment, p. 37.
62. UNFAO, Sustainable Crop Production and Protection: Background Document
(UNFAO: 1991), p. 2.
63. Barry Hugill, The Observer, (3 March 1996).
64. UNICEF Report 1994, The Guardian (22 June 1994).
65. In a similar vein, John Holloway of Edinburgh University argues in Capital &
Class that we live in a world where 'exploitation is not the exploitation of
poor countries by rich countries but of global labour by global capital';
quoted in William Keegan's column, The Observer (6 Feb. 1994).
66. Gustavo Esteva, 'The right to stop development', NGONET UNCED
Feature (13 June 1992), Rio de Janeiro.
67. See 'Reclaiming the commons', The Ecologist, Vol. 22, No. 4 (July-Aug.
1992) , p. 202.
68. Gustavo Esteva, quoted in The Ecologist, Vol. 22, No. 4 (July-Aug. 1992),
p. 174.
69. See Shlomo Avineri (ed.), Karl Marx on Colonialism and Modernization.
70. See Ted Trainer, Developed to Death.
71. Cornelius Castoriadis, 'The West and the Third World' in The Broken World
(Athens: Upsilon, 1992), p. 91.
72. Cornelius Castoriadis, The Broken World, p. 96.
73. Andre Gunder Frank, 'Development, democracy, and the market', Society
and Nature, Vol. 3, No. 1 (1995), pp. 1-25.
74. The Ecologist, Vol. 22, No. 4 (July-Aug. 1992), p. 159. For more data, see
Tim Lang and Colin Hines, The New Protectionism (London: Earthscan,
1993) , Ch. 3.
75. Andre Gunder Frank, 'Development, democracy, and the market', p. 12.

139
CHAPTER 4

The Generalized Crisis of the


Capitalist G r o w t h E c o n o m y

It has now become generally acknowledged that contemporary society,


which presently takes everywhere the form of a market/growth economy,
is undergoing a profound and widespread crisis. It is precisely the universal
character of this crisis that constitutes the determining factor differentiating
it from other crises in the past, while, simultaneously, it calls into question
practically every structure and 'signification' that supports contemporary
hierarchical societies in East and West, North and South. Thus, the present
crisis calls into question not just the political, economic, social and
ecological structures that came into being with the rise of the market
economy, but also the actual values that have sustained these structures and
particularly the post-Enlightenment meaning of Progress and its partial
identification with growth.
In the first part of the chapter the many dimensions of the present
generalized crisis are discussed (economic, political, social, ideological). In
the second part the focus is on the ecological crisis and the approaches
developed to interpret it, which, in fact, represent a synthesis of the
classical traditions that emerged with the rise of the market economy
(liberalism, socialism) and the ecological paradigm. The premises of three
other approaches, which, in various degrees, may be considered as not
belonging to this synthesis (deep ecology, 'sustainable' development and
'appropriate' development approaches) are also discussed.
In the final part, the Right's and Left's proposals to deal with the
multidimensional crisis are examined and it is argued that the proposal of
the former for further marketization is bound to worsen the crisis whereas
that of the latter for the enhancement of the 'civil society' is both a-
historical and Utopian in the negative sense of the word. The conclusion is
that the need for a new vision, which will transcend both the neoliberal
market economy and socialist statism, is, in the context of the present
generalized crisis, more pressing than ever.

140
THE CRISIS OF THE GROWTH ECONOMY

A multidimensional crisis
The economic dimension
As regards, 6rst, the economic crisis, the North has yet to recover from the
crisis that surfaced in the mid-1970s as a result of the fundamental contra-
diction that was created, as we saw in Chapter 1, by the internationalization
of the market economy and the parallel expansion of statism, in the sense of
active state control aiming at determining the level of economic activity. In
an effort to resolve this contradiction, a process of shrinking the state's
economic role and of parallel freeing and deregulating markets was initiated
by neoliberals and social liberals which has already had devastating con-
sequences on the majority of the population in the North.
Thus, the drastic reduction in statism has been at least partly responsible
for the vast expansion of open unemployment. However, it seems that the
present period of massive unemployment in the North is a transitional
period which will move the market economy from the relative full
employment conditions of the period of the social-democratic consensus
to a new period of massive low-paid employment and under-
employment. This development would be the outcome both of the
liberalization of labour markets and of a determined effort by the political
elites to reduce open unemployment, which carries a high political cost
and completely discredits the market/growth economy. A recent analysis
of US Labor Department numbers is revealing about present trends.
Between 1979 and 1995 more than 43 million jobs had been lost in the
USA and, as the analysis puts it (although most of these jobs have been
replaced),
the sting is in the nature of the replacement work. Whereas 25 years ago the vast
majority of the people who were laid off found jobs that paid as well as their old
ones, Labor Department numbers show that now only about 35 per cent of laid-
off full-time workers end up in equally remunerative or better-paid jobs . . . the
result is the most job insecurity since the Depression of the 1930s.1

Furthermore, the effect of the liberalization of markets in the USA has


been the drastic worsening of the distribution of income. The real wages
of two-thirds of American workers have dropped considerably (weekly
wages fell by 18 per cent between 1973 and 1990), causing a significant
widening of inequality. Thus, although average household income
2

climbed 10 per cent between 1979 and 1994, 97 per cent of the gain went
to the richest 20 per cent. 3

The USA trends are sure to be reproduced soon all over the North,
particularly after the collapse of the alternative 'Rhineland' model of
'social market' capitalism. The fierce competition among the countries in

141
TOWARDS AN INCLUSIVE DEMOCRACY

the Triad can safely be predicted to create conditions, not so much of


massive open unemployment, but of low-paid employment in the context
of 'flexible' labour markets. The OECD General Secretary was explicit
about this at the April 1996 Lille jobs summit of the 'Group of 7':
'Tomorrow, the third way between unemployment and insecurity will be
closer to the Anglo-Saxon rather than to the "European" model . . . it is
the Anglo-Saxon countries which, as a result of the greater flexibility of
their economies, are able to create more jobs'. 4

However, to my mind, the crisis of the market/growth economy in the


North does not constitute the decisive element in the economic crisis. As long
as the '40 per cent' society is somehow reproduced, the system may be
stabilized when it moves to a new equilibrium resting on the exploitation of
the technological advantages of the North and the low production cost of the
new South. I think the decisive element in the economic crisis consists of the
fact that the system of the market economy is not inherently capable of
transforming the market economy of the South into a self-sustaining growth
economy, similar to the one already established in the North. This is
demonstrated by the fact that the gap between North and South has widened
dramatically since the start of the peripheral marketization process — that is,
since the market economy of the former began to penetrate the traditional
economies of the latter - and it is still rapidly increasing. The result of the
universalization of the market/growth economy is the marginalization of a
very significant part of the world population. Thus, according to the ILO, in
the early 1990s, 120 million people were unemployed and 700 million people
were underemployed living below subsistence level. In other words, about
5

30 per cent of the world's population which is capable of working do not have
enough work for subsistence, a crisis correctly described as worse than in the
1930s. Furthermore, according to the latest UN Human Development
Report (1996), the total wealth of the world's 358 billionaires equals the
combined income of 2,300,000,000 people, the poorest 45 per cent of the
world population. These facts, by themselves, are calling into question the
entire economic and social basis of the market economy.
The inherent incapability of the North to create self-sustaining con-
sumer societies in the South emanates from the fact that the concentration
of economic power and the parallel increasing inequality all over the world
are not just consequences but also, as was shown earlier, preconditions for
the reproduction of the market/growth economy. The earth's natural
resources simply do not suffice for the standards of living enjoyed today by
the privileged in the North to be universalized. In other words, there is an
absolute natural barrier that makes impossible the globalization of the
North's capitalist type of growth economy.
Thus, even if world population was going to remain at the present level

142
THE CRISIS OF THE GROWTH ECONOMY

in the next century, the universalization of the North's growth economy


would imply the quadrupling of the annual world production of energy for
per capita energy consumption levels presently enjoyed by the high
income countries to be globalized (or a sixfold increase for everybody to
enjoy the American consumption standards). But, of course, the world
population is bound to increase significantly in the next century. If we
assume, for example, that the world population rises sometime in the next
century to 11 billion — a reasonable estimate on the basis of presently
available data - then, for the inhabitants of our planet to reach the per
capita energy use rates that those living in the rich countries enjoy now,
world energy production would have to be eight times as great as it is at
present (or 12 times as great for everybody to enjoy the US consumption
standards). However, on the basis of existing estimates of all potentially
6

recoverable mineral and energy resources (including all the deposits we are
ever likely to find), 'there is no chance that everybody in the world can rise
to anywhere near the per capita use rates that the few in rich countries
enjoy now . . . nor is there any foreseeable way of deriving such enormous
quantities of energy from alternative sources such as the sun, wind or
tides'. If, alternatively, we try to globalize the present Western energy
7

consumption standards using nuclear energy, then, as the same study


stresses, on the basis of the world population reaching 11 billion in the next
century, we would need to build 200,000 giant nuclear reactors, i.e. one
thousand times the world's present nuclear capacity.
For all that, despite the huge 'objective' crisis, which means that the
present economic system cannot meet even the basic needs of at least one-
fifth of the world's population, the world market economy is not widely
8

questioned. It is obvious that the recent collapse of the 'socialist' growth


economy and the consequent integration of the 'Left' into social-liberalism
has functioned as a decisive pacifying factor at the subjective level. This makes
the need for a new liberatory project, which will transcend both the market
economy and 'socialist' statism, even more imperative.

The political dimension


The phenomenon known as the 'crisis of polities', which is today under-
mining the foundations of parliamentary democracy, provides a character-
istic indication of the political dimension of the crisis. The growing crisis
of traditional politics is expressed today by several symptoms which
frequendy take the form of an implicit or explicit questioning of funda-
mental liberal democracy institutions (parties, electoral contests, etc.).
Such symptoms are the significant and sometimes rising abstention rates in
electoral contests, the diminishing numbers of party members, the fact that
the respect for professional politicians has never been at such a low level

143
TOWARDS AN INCLUSIVE DEMOCRACY

(the very frequent financial scandals of late in Italy, France, Spain, Greece
and elsewhere have simply reaffirmed the belief that politics, for the vast
majority of the politicians — liberals and social democrats alike — is just a
job, i.e. a way to make money), etc. Within this context of a general crisis
of traditional politics, it does not seem surprising, as we shall see below,
that Left politics suffers particularly badly.
As regards the general crisis of traditional politics, a historical cause of
the present mass apathy is the fact that 'the last two centuries have proved
the fundamental incompatibility of both liberal democracy and of
Marxist-Leninist "socialism" with the project of autonomy'. However,
9

the question still remains why this crisis has become particularly acute in
the last decade or so. To my mind, the answer has to be found in the
cumulative effect of the structural changes which have affected the market
economy since the mid-1970s:
• The growing internationalization of the market economy that has
undermined effectively not only the state's power to control economic
events but, by implication, the belief in the efficacy of traditional
politics.
• The acute intensification of the struggle for competitiveness among the
countries in the Triad (EC, USA, Japan) which, in turn, has resulted in
the collapse of social democracy, the establishment of the 'neoliberal
consensus' and the consequent effective elimination of ideological
differences between political parties.
• The technological changes which have led to the present post-industrial
society and the corresponding changes in the structure of employment
and the electorate, which, in combination with the massive unemploy-
ment and underemployment, have led to the decline of the power of the
traditional working class.
Today's electoral contests are in effect decided by the '40 per cent'
contended electoral majority, whereas the 'underclass', which was created
by neoliberalism and automation, mostly does not take part in such
contests. Therefore, the growing apathy towards politics does not mainly
reflect a general indifference regarding social issues, as a result of con-
sumerism, but a growing lack of confidence, especially of weaker social
groups, in traditional political parties and their ability to solve social
problems. It is not accidental that the higher abstention rates in electoral
contests usually occur among the lower income groups, which fail to see
anymore any significant difference between liberal and social-democratic
parties. Another part of the growing indifference with traditional politics,
especially among young people, is due to the growing disillusionment
with socialism, which has led to the myth of 'the end of ideologies' and

144
THE CRISIS OF THE GROWTH ECONOMY

further enhanced the spreading of the culture of individualism that has


been promoted by neoliberalism.
However, if the worsening of the crisis in politics may be attributed to
the above factors, the crisis itself is chronic and embraces all citizens (apart
from a very small minority) who feel alienated from a process which in
reality they do not control. This, in turn, puts into question liberal
democracy, a system that allows a social minority (professional politicians)
to determine the quality of life of each citizen.
Left politics has been particularly affected by the general crisis of
traditional politics. The usual explanation of this phenomenon goes back
to the challenge to the system posed by the rise of the New Left in the late
1960s which, once it withered away, was inevitably followed by the ruling
elite's backlash which led to a general shift to the Right in the West. But,
I think that the structural changes mentioned above were bound to
particularly affect Left politics, backlash or no backlash. The collapse of
social democracy was not only the inevitable outcome of the drastic
reduction of the state's economic power, and in particular its power to
secure high levels of employment in an internationalized economy, but
also because Keynesian policies undermined the profits and competitive-
ness of capital, as they pushed real wages to rise faster than productivity.
The abandonment of the full employment commitment, combined
with the gradual dismantling of the welfare state (in order to create better
conditions of competitiveness through the drastic reduction of the 'social
wage' which was putting a significant burden on the cost of production),
fatally undermined the political appeal of social democracy and led to the
present crisis of social-democratic politics. Still, social democrats pretend
that there is no 'neoliberal consensus' and that their policies are signifi-
cantly different from those of the neoliberals. All this, despite the fact that
the fundamental neoliberal principle, that is, the maximization of the role
of the market in the economy and society, has already been enshrined in
their own governmental or political programmes. However, the neo-
liberal consensus, which in Europe has already been institutionalized
through the Maastricht Treaty, is not merely a temporary phenomenon
but, as we have seen above, represents the political consequence of
structural changes in the market economy system that lead to the comple-
tion of the market — a historical process that was merely interrupted by the
statist phase.
Finally, the collapse of 'actually existing socialism' played a crucial role
with respect to the decline of Left politics, since it contributed significantly
to a further disillusionment with the socialist project and provided the
moral cover, for those that needed it, for individualist values. The massive

145
TOWARDS AN INCLUSIVE DEMOCRACY

shift of many ex-socialist intellectuals towards liberalism is a clear indica-


tion of this. The fact that the regimes in the East were not authentically
socialist in the first place did not play any significant role in modifying the
general pessimism created by their collapse. This may be explained on the
grounds either that the average supporter of the Left in the West was not in
a position to assess the true nature of these regimes, or that the very failure of
the experiment for radical social change in a sense 'proved' the inapplicability
of socialist ideals. Thus, the collapse of 'socialist' statism in the East, instead of
functioning as a catalyst for the development of a new non-authoritarian
conception of politics — in other words, a general movement to an authentic
Left - simply led to a general movement to the Right. This movement to the
Right refers not just to the '40 per cent' privileged minority which benefits
from the neoliberal consensus but also to a significant part of the middle
groups between this minority and the underclass, which hope to benefit from
the neoliberal consensus. The rest, including most of the underclass who are
the main victims of the neoliberal internationalized economy, have fallen into
political apathy and an unconscious rejection of established society which
usually has taken the form of an explosion of crime and, sometimes, violent
riots. And this takes us to the social dimension of the crisis.

The social dimension


The present social crisis is in fact a continuation of the crisis that started in
the 1960s when the hierarchical relations between social individuals in
contemporary society (between bosses and workers, men and women,
parents and children, teachers and pupils and so on) were questioned.
Fundamental traditional institutions, like marriage, the family, etc. which
for many years had regulated some of these relations, have since then been
faltering, despite the conservative backlash that accompanied the rise of the
neoliberal consensus. This crisis in social relations reflects, also, a crisis of
identity, in the sense that people no longer have well-defined socially
predetermined roles with which they may identify. Such predetermined
roles are collapsing daily, creating confusion in social relations and shaking
society's internal structure. At the same time, the crisis of identity manifests
itself, lately, at the cultural level as well, leading to the well-known ethnic
conflicts (e.g. in the former Yugoslavia).
The social crisis has been aggravated by the expansion of the market
economy into all sectors of social life, in the context of its present
internationalized form. It is, of course, well known that the market is the
greatest enemy of traditional values. It is not, therefore, surprising that the
social crisis is more pronounced in precisely those countries where
marketization has been well advanced. This becomes evident by the fact
that neither campaigns of the 'back to basics' type (Britain), nor the growth

146
THE CRISIS OF THE GROWTH ECONOMY

of religious, mystic and other similar tendencies (USA) have had any
restraining effect on the most obvious symptom of the social crisis: the
explosion of criminality.
In Britain, for instance, it took 30 years for the crime rate to double,
from 1 million incidents in 1950 to 2.2 million in 1979. However, in the
past ten years, the crime rate has more than doubled, and it reached the 5
million mark in the 1990s. The ruling elites respond to the explosion of
crime by building more jails, despite the fact that, as a Home Office study
in Britain (reflecting similar research from the USA and Germany) has
shown, the prison population has to increase by 25 per cent to cut the
annual crime rate by 1 per cent! Thus, in the USA the prison population
10

has tripled in the last 15 years (from 330,000 in 1980 to 1.5 million in
1995) with the black population being the most hard hit (one in three
black males aged 20—30 is either in prison or on probation) and in Britain
increased by 30 per cent in the last three years." In fact, the explosion of
crime, as Martin Woolacott points out, tends to take the form of an
insurgency in urban conglomerations all over the world and is treated as
such by the ruling elites.
12

So, the marketization of the economy has not only increased the
economic privileges of the privileged minority; it has also increased its
insecurity. This is why the new overclass increasingly isolates itself in
luxury ghettos. At the same time, marketization, and in particular the
flexible labour market, has increased job insecurity - a phenomenon that
today affects everybody apart from the very few in the upper class. In
Britain, for instance, 'five million people have been made redundant in the
1990s and although the great majority soon found another job, their
experience of work has been transformed'. No wonder that a very recent
13

poll showed that only one person in six nowadays finds it easier than it was
a few years ago to plan the future with confidence; and almost three times
as many people, 45 per cent, find it harder. Similarly, in the USA three-
14

quarters of all households have had a close encounter with layoffs since
1980, according to a poll by the New York Times and, in a reversal from the
early 1980s, workers with at least some college education make up the
majority of people whose jobs are eliminated and better paid workers
account for twice the share of the lost jobs that they did in the 1980s. The
13

very fact that full-time jobs have been disappearing fast in the last 20 years
is significantly contributing to the feeling of insecurity. In Britain, again,
the proportion of the adult population in full-time tenured jobs fell from
about 55 per cent in 1975 to 35 per cent in 1993. 16

For all that, the growth economy has already created a growth society, the
main characteristics of which are consumerism, privacy and the sub-
sequent disintegration of society's cohesion as citizens are converted into

147
TOWARDS AN INCLUSIVE DEMOCRACY

consumers. In this sense, the growth society heralds the 'non-society', that
is, the substitution of atomized families and individuals for society. It is the
increasingly atomized character of the growth society that, at the sub-
jective level, allows its reproduction, despite the fact that given the present
potentialities, it is a dismal failure.

The ideological dimension


The generalized crisis manifests itself, also, at the ideological level, with a
parallel crisis regarding the credibility of science. This crisis, which
surfaced about 25 years ago, has systematically undermined many 'truths' 17

and especially those on the basis of which we used to justify our 'certainty'
concerning the 'scientific' interpretation of social and economic phenom-
ena. But, as science plays a double role with respect to the reproduction of
the growth economy, this crisis is particularly significant. Thus, first,
science plays a functional role in the material reproduction of the growth
economy through its decisive contribution to the effort to dominate the
natural world and maximize growth. Second, science plays an equally
important ideological role in justifying 'objectively' the growth economy.
Just as religion played an important part in justifying feudal hierarchy, so
does science, particularly social 'science', play a crucial role today in
justifying the modern hierarchical society. In fact, from the moment
science replaced religion as the dominant world view, it had 'objectively'
justified the growth economy, both in its capitalist and socialist types.
However, the realization of the effects of economic growth upon
Nature and, subsequendy, upon the quality of life, called into question the
functional role of science in advancing Progress. When, on top of this, the
credibility of scientific truths themselves was challenged, whether those
truths originated in orthodox social science or in the alternative 'science'
18

of socialism, Marxism, then, the moment of truth for the growth


19

ideology had come. Today, the central imaginary signification of the


growth economy, that is, the identification of Progress with growth and
the implied idea of human domination over Nature, is, for the first time
after the Enlightenment, under massive fire.
At the same time, the collapse of socialist statism and the rise of
neoliberalism had the effect that the radical critique of 'scientific' socialism,
statism and authoritarian politics did not function as a catalyst for further
development of the non-authoritarian Left thinking. Instead, the critique
of scientism was taken over by post-modernist theoreticians and was
developed into a general relativism, which inevitably led to the abandon-
ment of any effective critique of the status quo and to the theorization of
conformism. 20

But, as will be stressed in Chapter 8, it is not science itself and rationalism

148
THE CRISIS OF THE GROWTH ECONOMY

in general that have to be blamed for the present multidimensional crisis, as


irrationalists of various types usually assert. Like technology, applied science is
not 'neutral' to the logic and dynamic of the market economy. Science
belongs to the autonomy tradition from the point of view of the methods it
uses to derive its truths and, sometimes, even from the point of view of its
content (e.g. demystification of religious beliefs). Therefore, what is needed
today is not to jettison rationalism altogether in the interpretation of social
phenomena but to transcend 'objective' rationalism (i.e. the rationalism which
is grounded on 'objective laws' of natural or social evolution) and develop a
new kind of democratic rationalism.

The growth economy and the ecological crisis


A major component of the present multidimensional crisis is the ecological
crisis, namely the crisis which concerns mainly not the relations between
social individuals, as the other dimensions of the crisis, but our interaction,
as social individuals, with the environment. The upsetting of ecological
systems, the widespread pollution, the gradual exhaustion of natural
resources and, in general, the rapid downgrading of the environment and
the quality of life have made the limits of economic growth manifestly
apparent in the past 30 years.
Despite the efforts of 'eco-realists' to give a rosy picture of the growth
21

economy, it cannot be denied that carbon dioxide concentrations (the


main contributor to the greenhouse effect) which have remained almost
stable for the entire millennium, that is up to the emergence of the market
economy, have since then taken off, increasing by almost 30 per cent. As 22

a result, in the period since the beginning of this century, a long-term


trend of warming in the lowest layer of the atmosphere can be established 23

and all the recent evidence points to a significant rise in temperatures in the
last decade or so. Also, the fact cannot be denied that half of the world's
24

tropical forests, home to a third of the world's plants and animals, have
disappeared in this century alone and that recently this process accelerated.
Thus, in the last 10 years (1980-90) the annual rate of felling of tropical
forests rose by 36 per cent and, today, a forest area approximately the size
of Austria disappears every year! Finally, no one can deny the fact that, as
25

a result of intensive farming - another direct result of the emergence of the


growth economy - and its effects on agroecosystems, animal rearing, etc.,
the natural world, including human health, is seriously damaged.
The case of the 'mad cow disease' (Bovine Spongiform Enceph-
alopathy — BSE) is illustrative because it is directly related to both the main
elements of the market economy: marketization and growth. BSE has
taken on massive proportions in Britain during this decade and because of
the possible link with Creutzfeldt-Jacob disease (CJD), today, hundreds of

149
TOWARDS AN INCLUSIVE DEMOCRACY

thousands of human lives may be in danger. The very fact that this massive
crisis happened in Britain is not of course accidental. As we saw in Chapter
1, Britain was pivotal in the launching of the present neoliberal phase of
marketization. Thus, in the context of the deregulations and lifting of
social controls on markets that followed the neoliberal rise to power in
1979, animal feed procedures were fatally relaxed. As a result, British
26

farmers, in their struggle to minimize costs — as the market economy


dictated — moved to less safe cow feed procedures, initiating the present
crisis. This was not because British farmers were more greedy but because
they were more exposed to market forces than their counterparts else-
where. Farmers everywhere, in order to survive in a market/growth
economy, have to keep minimizing the production cost, intensifying
production and increasing the size of their holdings. Thus, as farmers
become more and more dependent on inputs (chemicals, seed, etc.) sold to
them by the agrochemical industry, they have to grow in order to survive.
In Britain, for instance, a dairy farmer in the 1950s could earn a living with
15 cows; by the 1980s to have the same real income he needed 75 cows. 27

At the same time, as small farmers are thrown out of their farms, unable to
survive in the grow-or-die competition with agribusiness, concentration
increases: the number of farms in Britain fell from 454,000 in 1953 to
242,300 in 1981. 28

The realization of the ecological implications of the growth economy


has led, particularly in the last quarter of the century, to the development
of various 'ecological' approaches. I am not going to deal here with the
differences between environmentalism and ecologism and, generally, the
29

controversies among Green thinkers about what constitutes 'ecological'


thought. As far as this book is concerned any approach dealing with the
environmental implications of the growth component of the market
economy can be classified under what we may call the 'ecological para-
digm'. It is therefore obvious that I include in the ecological paradigm the
approaches which aim to 'green' the growth economy, as well as those
aiming to jettison it altogether. In the former category belongs, for
instance, the 'sustainable development' approach (see next section) and
liberal environmentalism, whereas in the latter belong the social ecol-
30

ogy approach, which sees the causes of the present ecological crisis in
31

terms of the hierarchical structures of domination and exploitation in


capitalist society, eco-socialism, which emphasizes the significance of
32

production relations, the 'appropriate development approach' and the


deep ecology approach.
Some of the above approaches explicitly attempt a synthesis between
one of the classical traditions which focus on the marketization element of
the market economy and an analysis of the ecological implications of

150
THE CRISIS OF THE GROWTH ECONOMY

growth; other approaches do not aim, at least explicidy, at such a synthesis.


As regards the former, one may, for instance, classify under the 'synthesis'
label the approaches of liberal environmentalism, eco-socialism and social
ecology, which represent an explicit attempt for a synthesis with liberal-
ism, socialist statism (usually Marxism) and libertarian socialism respec-
tively. As regards the latter, the case par excellence is of course that of 'deep
ecology', which focuses almost exclusively on the ecological implications
of the growth economy. However, the 'appropriate development' and
'sustainable development' approaches may also be classified in this category
because, although they do deal with both the marketization and growth
components of the market economy, it would be inaccurate to classify them
as an attempt at an explicit synthesis with any of the old traditions.
In the sections that follow, these three approaches will be discussed in
more detail.

The sustainable development approach


The 'sustainable development' approach, which was promoted by the
Brunddand Report, and embraced by the Green realos all over the world,
33

aims at achieving sustainable development. This is defined as 'develop-


ment that meets the needs of the present without compromising the ability
of future generations to meet their own needs'. 34

The Report is founded on three fundamental principles, according to


which, the continuation of growth:
(a) is the key to social justice, since it can eliminate poverty; 35

(b) is the key to environmental protection; 36

(c) 'could be environmentally sustainable, if industrialized nations can


continue the recent shifts in the content of their growth towards less
material and energy-intensive activities and the improvement of their
efficiency in using materials and energy'. 37

As regards (a), one may point out that there are two main ways in which
economic growth may reduce poverty: either through the trickle-down
effect (as neoliberals argue) and/or through some kind of redistributive
government action (as statists hold). Leaving aside the inefficacy of the
trickle-down effect which was considered earlier, it is obvious that
effective redistributive government action in favour of the underclass is by
definition excluded within the framework of the neoliberal internation-
alized market economy, which is taken for granted by the Report. In fact,
as we have seen in Chapter 1, the redistribution of income that takes place
in this framework is against the underclass, not in favour of it!
As regards (b) what the Report implies is the possibility of a 'green

151
TOWARDS AN INCLUSIVE DEMOCRACY

capitalism'. But this assumed possibility ignores the fundamental contra-


diction that exists between the logic and dynamic of the growth economy,
on the one hand, and the attempt to condition this dynamic with
qualitative criteria on the other. Thus, the contradiction that emerged in
the past, when an attempt was made by socialist statism to introduce
socialist criteria (equity and social justice) in the growth process, is certain
to emerge again at present, if a similar attempt is made to introduce
ecological criteria (e.g. sustainability and enhancement of the resource
base) into the same process.
Finally, as regards (c), although one would agree that some gains have
been made in pollution control and the efficient use of energy and
resources, there is no sign that the ecological problems have become, as a
result, less serious or threatening. Instead, the opposite seems to be the case
with respect to all major ecological problems, that is, the greenhouse
effect, acid rain, salinity, ozone depletion, forest loss, desertification, soil
loss and so on. 38

One may therefore conclude that the fact that this approach ignores the
phenomenon of the concentration of power, as a fundamental consequence
and also a precondition for growth, is not irrelevant to the essential solutions
proposed by it: more growth, more effort and better policies, laws and
institutions, as well as increasing efficiency of energy and resource use. It is
therefore obvious that the real aim of this approach is not to propose ways to
achieve sustainable development but, instead, ways to create an 'eco-
friendly' market/growth economy - a contradiction in terms.

The deep ecology approach


Supporters of the sustainable development approach are not the only ones
who see the way out of the ecological crisis in contradictory terms, that is,
in terms of a growth economy subject to qualitative prescriptions of
sustainability. Deep ecologists fall into a similar trap. Deep ecology
attributes equality to all forms of life ('biocentric equality') and suggests
that relations with the natural world will have to change first, in order to
change social relations, and not vice versa. Thus, supporters of this
approach argue that the ultimate cause of the ecological crisis should be
found in the historical identification, since the Enlightenment, of progress
with economic growth. Consequendy, the way out of the crisis is to
abandon notions of progress so that the present growth economy can be
replaced by a 'steady-state economy' or even a 'declining-state econ-
omy'. Similarly, others see sustainable development in terms of 'a
39

development path towards a stable state', which necessitates a 'stable


population' — a clear indication that the deep ecology approach adopts
40

fully the overpopulation myth that we considered earlier.

152
THE CRISIS OF THE GROWTH ECONOMY

It is obvious that deep ecology sees the causes of the ecological crisis as
the direct outcome of an anthropocentric approach to the natural world,
which sees human values as the source of all value and aims at the use of
nature as an instrument in the satisfaction of human wants. It is also clear
that the deep ecology approach considers the present non-sustainable
development as a cultural rather than as an institutional issue, as a matter of
values rather than as the inevitable outcome of the rise of the market
economy, with its grow-or-die dynamic, which has led to the present
growth economy.
However, it would be hardly justifiable to blame anthropocentrism for
the present global ecological damage. Anthropocentrism, after all, was
around — especially in the West — long before the process of massive
ecological destruction started about two centuries ago. One could there-
fore argue that it is not anthropocentrism as such that has led to the present
crisis but the fact that the market economy and the subsequent growth
economy had to be founded on an ideology that justified the human
domination of nature en masse. If this is so, then, the way out of the
ecological crisis is not just a matter of changing our values to put nature on
an equal footing with treasured human values. No one could seriously
expect that a new culture involving a non-domineering approach towards
nature could have a chance of appealing to the vast majority of the earth's
population who are faced with the dilemma of jobs versus the environ-
ment. It is therefore obvious that the dilemma 'growth economy' versus 'a
steady-state economy' is a false one and is usually put by people who do
not face, as a result of their social position, the above genuine dilemma.
Furthermore, changing our values with respect to our relationship to
nature will not, by itself, force the market economy or the state to wither
away. It is therefore naive to suggest, as deep ecologists do, that 'if
everyone consumed significantly less, the world market economy would
probably collapse'. It does not require a deep historical knowledge or
41

knowledge of economics to realize that a significant decline in sales, far


from leading to a collapse of the market economy, may simply induce a
slump leading to even more massive unemployment at the economic level
which might easily be accompanied by the rise of totalitarian regimes at the
political level (perhaps of the eco-fascist variety this time).
Similar considerations could be expressed with respect to another
version of deep ecology which stresses the 'Euro-centric' character of the
growth economy and the need for sustainable development to be based on
'knowledge and technologies that originate from an intimate under-
standing of the natural world [and] . . . the revival of a very ancient cultural
gaiocentric tradition of considering the earth as a goddess and mother of all
life'. According to this version, land reform, a return to traditional
42

153
TOWARDS AN INCLUSIVE DEMOCRACY

cultures and the abandonment by industrial countries of their fatal attrac-


tion to the fossil fuel technologies and culture is the solution to the
problem of unsustainable development — a problem which is created by
capitalism, defined as 'primarily the politics of acquiring and holding
wealth for a small ruling class'. 43

But capitalism, or better, the market economy/growth economy, is not


just a matter of policy or ideology. It is a historical structure, a form of social
and economic organization. Therefore, the enclosure of land in the South, as
well as the kind of technologies developed within the market economy, are
not just matters of policy, or of 'aping the white culture', but part and parcel
of the market economy system itself. Similarly, competition and integration
in the world economy are not simply cultural issues but inevitable outcomes
of the institutional framework defined by the market economy. Hence, the
root of the problem is not that 'the entire capitalist culture . . . is ecologically
illiterate and, therefore, dangerous and unsustainable'. The capitalist culture
44

is a culture that has developed in consistency with the fundamental organiza-


tional principles of the market economy and the growth economy, that is,
efficiency and competition. It is the establishment of the market economy
that required its own culture and not vice versa. People (I do not mean those
controlling the means of production) did not wake up one fine morning and
decide to be efficient and competitive. It was the destruction of their own
livelihood by, for instance, the enclosure movement in Britain, or by
colonialism in the colonies, which forced them — in their struggle to survive
- to join the market economy system and adopt the principles of com-
petitiveness and efficiency.
This is the main reason why sustainable development is not just a
cultural issue, or a matter of changing policies, but a matter of changing the
entire institutional framework and replacing it with institutions which
negate the concentration of power, that is, with a markedess and money-
less economy based on an inclusive democracy. Then, and only then, can
one seriously hope that the culture based on the growth ideology and the
subsequent idea of dominating nature will wither away. In other words,
concentration of power within the context of the growth economy is the
necessary condition for the present set of cultural values which involve an
ideology of dominating nature. Although simply negating the concentra-
tion of power is not a sufficient condition for the development of a new set of
values with respect to our relationship to nature, it is definitely the necessary
condition for a radical change in cultural values.
Finally, it is not the industrial society itself or technology as such that
should be blamed for the present ecological crisis, as deep ecologists usually
assert. Technology has never been 'neutral' with respect to the logic and the
dynamics of the market economy. For all that, environmentalists as well as

154
THE CRISIS OF THE GROWTH ECONOMY

socialist statists explicitly, or usually implicitly, assume that technology is


socially neutral and that we only have to use it for the right purposes in order
to solve not just the ecological problem but the social problem in general. It
is obvious that this approach ignores the social institutionalizing of science
(see Chapter 8) and technology and the fact that the design, and particularly
the implementation of new techniques, is directly related to the social
organization in general and the organization of production in particular. In 43

a market economy, as in any society, technology embodies concrete


relations of production, its hierarchical organization and, of course, its
primary aim which, in the case of a market economy, refers to the
maximization of economic growth and efficiency (defined on the basis of
narrow techno-economic criteria) for profit purposes. So, technology is
always designed, or at least those designs are adopted, which best serve the
objectives of the market/growth economy.
Similarly, it is not industrialism in general that created the present eco-
damaging form of economic organization but the specific type of industrial
society that developed in the last two centuries in the framework of the
market/growth economy. Therefore, the ultimate causes of the ecological
crisis are the market economy and its offspring, the growth economy, and
not its symptoms, namely, the present type of technology and industrial
society (see p. 278).

The 'appropriate development' approach


This approach, although it starts from a valid critique of the market/
growth economy, ends up with conclusions which are not much different
from those of deep ecologists. The central argument of this approach is
summarized as follows by its main exponent:
There has been a great deal of development. The trouble is that it has been
highly inappropriate development. It has been development in the
interests of the rich — the Third World upper classes, the transnational
corporations, and the rich countries . . . market forces have a powerful
tendency to produce inappropriate development. 46

The type of 'appropriate' development suggested by this approach implies


the creation of a 'conserver' society that would involve 'non-affluent
lifestyles, high levels of local self-sufficiency and co-operation, smallness of
scale, decentralization and a zero growth'. Still, this approach, contra-
47

dicting its explicit critique of the foundations of the market economy,


proposes that appropriate development would involve an economy that
'could retain much free enterprise in the form of small firms and co-
operatives'. Also, the localist character of this approach, which takes; for
48

granted the existing oligarchic political and economic structures, becomes

155
TOWARDS AN INCLUSIVE DEMOCRACY

obvious from the proposals for 'devolution of many functions from the
state to the neighbourhood level [which] would reduce the need for
bureaucracy'. 49

It is obvious that this approach, by not placing power relations at the


centre of the analysis, ends up with a 'third way' beyond capitalism and
socialism, which seems not to be in fundamental contradiction with either
the market economy or liberal democracy. This impression is confirmed
by the proposal that this approach makes to regulate the market with the
aim of reversing the present concentration of economic power. Clearly,
50

such a proposal ignores the fact that any serious attempt to regulate the
market in order to decentralize economic power is today both a-historical
and Utopian. It is a-historical because it does not see that the present
deregulation 'mania' is, in fact, part and parcel of the current phase of the
'marketization' process, i.e. of the internationalized phase of the market
economy; and it is Utopian because it ignores the grow-or-die dynamic of
the market economy.
But utopianism (in the negative sense of the word) is not the only trap
into which the appropriate development approach falls — a utopianism
which is inherent in any conception of compatibility between 'appropriate
development' and the present institutional framework. The same could be
said about the trap of localism, which is implied by the notion of 'local self-
sufficiency'; and, finally, the trap of objectivism, which is innate in any
notion of 'basic needs' that are not defined democratically.
So, this approach, by attempting 'to hold open the possibility of a rather
non-Marxist transition which attends to the cultural problem (value
change) now rather than after the "revolution" ' derives identical solu-
51

tions to those of deep ecology, i.e. that capitalism will die if enough people
change their values and lifestyles. This is not surprising, in view of the fact
52

that neither this approach nor the deep ecology approach can see that the
dominant social values which determine mass consciousness cannot change
until the present political and economic structures change. Still, this does
not mean that we should wait for the 'revolution' so that values might
change. As I will attempt to show later, what is needed is the development
of a strong political and social movement that explicitly aims at replacing
the present oligarchic political and economic structures, created by liberal
democracy and the market economy respectively, with institutions of
political and economic democracy. It is only within a process of establish-
ing such democratic structures that one could seriously hope that the
present cultural values of dominating nature, which emerged as a by-
product of the concentration of power generated by the growth economy,
will wither away.

156
THE CRISIS OF THE GROWTH ECONOMY

Is there a way out?


Several, if not all, of the above dimensions of the present crisis are
acknowledged by both the Right and the Left. Not surprisingly, in terms
of the above analysis, the proposals made by both ends of the political
spectrum, despite appearances, do not differ significantly between them, as
both the Right and the Left take for granted the existing institutional
framework of the market economy and liberal democracy. But let us
consider in more detail the relevant proposals and counterpose them to the
requirements of a new liberatory approach.

The Right's proposal: further marketization


On the part of the Right, the New Right's solution to overcoming the
53

present multidimensional crisis is further marketization. But, if we con-


sider the possible effects of further marketizing the economy, it becomes
obvious that none of the aspects of the multidimensional crisis that we
considered is amenable to market solutions. Therefore, the Right's
proposals for freeing completely the market forces, privatization and
a minimal state amount to nothing less than the rational organization of
inequality.
Thus, as regards, first, the economic crisis, in the sense defined above,
the enhancement of the marketization process could confidently be
expected to aggravate the crisis, since it is bound to increase the concentra-
tion of economic power, both in the sense of further widening the North-
South gap and in the sense of widening the gap between the 'new' North
and the 'new' South.
As regards the North—South gap, it can easily be shown that it is not
competition that has historically led to some advances in the production
efficiency and international competitiveness of late developers, but
protectionist/interventionist policies. The significant widening of the
34

North-South gap in the last 15 years, which marked the worldwide


liberalization of markets, is a clear indication for the future. This means
that the intensification of marketization, far from helping the growth
economy to be universalized, is in fact a crucial factor in further concen-
trating economic power in the Triad countries.
As regards the 'new' North—'new' South gap, i.e. the distribution of
income, the evidence is overwhelming concerning the negative effects of
further marketization. Thus, a recent OECD study found that in the
1980s, when the neoliberal market economy started flourishing, the
income gap had widened in many of the 25 OECD member states,
particularly the models of neoliberalism, the USA and the UK. Also, 33

according to UN data, the gap between the richest 20 per cent and the
poorest 20 per cent of the world's population increased eightfold in the

157
TOWARDS AN INCLUSIVE DEMOCRACY

1980s, measured in per capita incomes. No wonder that the global


36

income distribution presents a pattern where the richest 20 per cent of the
population receives 85 per cent of world income and the 20 per cent at the
bottom receive just 1.4 per cent of it. Thus, the New Right's claim that
37

the liberalization of markets brings about a decentralization of economic


power is obviously false. In fact, the opposite is true: the more liberalized
the markets are, the greater the concentration of economic power in terms
of income and wealth. The fact that the USA has always been the model of
a market economy is not irrelevant to its also being 'the most unequal
industrialized country in terms of income and wealth' - a fact confirmed
38

by Federal Reserve figures from 1989 (the most recent available) which
show that the wealthiest 1 per cent of households owns nearly 40 per cent
of the nation's wealth! Also, a comparative study of income distribution
trends in countries characterized by different degrees of marketization
found, not surprisingly, that the more 'liberal' an economy is the greater
the increase in income inequality. 39

Finally, as regards the ecological and social crisis, the freeing of markets,
which is advocated by the New Right, inevitably leads to a deepening of
both crises. As the historical experience of the last 200 years has shown,
when the rise of the market economy and the subsequent growth econ-
omy led to the greatest ecological damage in the history of humankind, the
market economy had neither any inherent mechanism to avert the
ecological damage nor any effective social controls compatible with its
logic and dynamics. Also, as regards the social crisis, it is unavoidable that
the marketization of society would further undermine traditional and
community values deepening the crisis. Similarly, the marketization of
culture inevitably undermines it by homogenizing cultural activity and by
trivializing artistic activity, which, forced to survive as a profitable activity,
is prevented from playing its avant-garde role.

The Left's proposal: the 'civil societarian' approach


On the part of the Left, the way out of the crisis is expressed in terms of the
proposal to enhance 'civil society', that is, to strengthen the various
networks which are autonomous from state control (unions, churches,
civic movements, co-operatives, neighbourhoods, schools of thought,
etc.). This tendency originated in the ex-Second World, where, as a
reaction to the Third International's ideology, a series of anti-bureaucratic
movements flourished in the past decade - from Polish Solidarity to
movements for a 'communism with a human face'. Later, thanks to the
theoretical work of modem social democrats of the Habermas School, 60

this new tendency spread to the First World and today exerts considerable
influence among social democrats, eco-socialists and others. As the civil

158
THE CRISIS OF THE GROWTH ECONOMY

societarian approach constitutes, in fact, the entire basis of the present


Left's problematic and of the approaches under the new rubric of the so-
called 'radical' democracy, I think it would be fruitful to examine this
approach in some detail.
The perhaps clearest argument for the 'civil societarian' approach is
given by Michael Walzer. Although the Habermasian description of this
61

approach looks more 'sophisticated' than the one given by Walzer, in fact,
much of the sophistication of the former arises out of the obscure language
and terminology used by Habermas who (like Althusser before him)
knows well that for many 'intellectuals', especially in the non-Anglo-
Saxon tradition, the 'seriousness' of an argument is related to the effort
needed to understand it! I would therefore fully agree with Noam
Chomsky who, referring to post-modernism, called this type of theorizing
'pseudo-scientific posturing'. 62

Walzer, starting from a definition of civil society as 'the space of


uncoerced human association and also the set of rational networks -
formed for the sake of family, faith, interest and ideology — that fills this
space', asks what sorts of institution we should work for if our objective
63

is the good life. To give an answer to this question Walzer refers to four
principal ideologies.
The first, 'the republican ideology', holds that the preferred setting for
the good life is 'the political community, the democratic state, within
which we can be citizens'. The author, after confusing non-statist
64

democracy based on demos with present forms of statist democracy,


dismisses this theory on the grounds that 'Politics rarely engages the full
attention of the citizens who are supposed to be its chief protagonists.
They have too many other things to worry about. Above all they have to
earn a living.' Thus, Walzer, while he is right in criticizing republicans
65

like Arendt who put economic activity out of the public realm, the realm
of freedom, is absolutely wrong in his conclusions. Instead of calling for an
inclusive non-statist democracy of powerful citizens, which would imply
democracy in all realms, the political, the economic and the social, he
expresses his preference for an 'inclusive civil society' of powerless
66

citizens - members of networks, who leave the privileged in present


society to enjoy undisturbed their privileges!
According to Walzer, the second ideology — 'the socialist ideology' —
involves a turning away from republican politics and focuses instead on
economic activity. The preferred (by socialists) setting, he argues, is the
co-operative economy whereas politics would wither away within a non-
political state characterized by regulation without conflict, 'the adminis-
tration of things'. Here, again, the author, by exploiting the partial
character of the socialist vision, in exactly the same way as he did with the

159
TOWARDS AN INCLUSIVE DEMOCRACY

republican vision, prepares the ground to sow the seed of an 'inclusive'


civil society.
Walzer then moves to the third ideology, 'the capitalist ideology',
where the preferred setting for the good life is considered to be the
marketplace. The emphasis here is on consumer choice and, as in the
socialist economy, only a minimal state (and by implication, minimal
politics) is required. The main objection Walzer has against this ideology
is that 'Autonomy in the marketplace provides no support for social
solidarity. Despite the successes of capitalist production, the good life of
consumer choice is not universally available.' 67

Following this sort of argument, it is not surprising that civil societarians


endorse fully the market economy and the state, as Walzer makes clear:
The market, when it is entangled in the network of associations, when the
forms of ownership are pluralised, is without doubt the economic formation
most consistent with the civil society argument. This same argument also
serves to legitimate a kind of state, liberal and pluralist more than republican
(not so radically dependent upon the virtue of its citizens). Indeed, a state of
this sort is necessary if associations are to flourish.68

Finally, in the fourth ideology, 'the nationalist ideology', the preferred


(by nationalists) setting is the nation where we are bound to each other by
ties of blood and history. In this setting the good life is more a matter of
identity than activity, faith not works. This ideology is put by Walzer 'in
the same bag' as the other three and dismissed for the same reason: 'All
these answers are wrong-headed because of their singularity. They miss
the complexity of human society, the inevitable conflicts of commitment
and loyalty'. So, in the context of the pseudo-plural society advanced by
69

civil-societarians the important arena is located 'in the associational net-


works of civil society, in unions, parties, movements, interest groups and
so on [where] these same people make many smaller decisions and shape to
some degree the more distant determinations of state and economy'. Of 70

course, the bigger decisions, which affect the lives of the same people in a
much more significant way than the smaller ones, are left to the political
and economic elites who, presumably, know better!
So, the civil societarians' way out of the multidimensional crisis seems to
be radically different from the one proposed by the Right. Instead of
further marketization, they argue for limits (i.e. social controls) to be
imposed on markets and the state by the civil society networks. Thus,
Walzer, recognizing that 'the market makes for inequality' and that the
main problem with inequality is that 'it commonly translates into domina-
tion and radical deprivation' concludes that 'were the market to be set
firmly within civil society, politically constrained, open to communal as

160
THE CRISIS OF THE GROWTH ECONOMY

well as private initiatives, limits might be fixed on its unequal outcomes'. 71

Furthermore, instead of privatizations he proposes a kind of 'market


pluralism' which he describes as follows: 'Civil society encompasses or can
encompass a variety of market agents: family businesses, publicly owned or
municipal companies, worker communes, consumer cooperatives, non-
profit organisations of many different sorts.' Finally, acknowledging the
72

fact that 'civil society, left to itself, generates unequal power relationships
which only state power can challenge' he concludes that Only a demo-
cratic state can create a democratic civil society; only a democratic civil
society can sustain a democratic state'. 73

So, it is obvious that the civil societarian approach involves a high


degree of statism. Furthermore, in effect, it assumes a closed market
economy. In fact, there are very few versions of the civil societarian
approach that explicitly assume the present degree of internationalization
of the market economy. Such an internationalist version of the civil
societarian approach (apart from David Held's 'cosmopolitan model of
democracy', to be considered later), is the very recent study by Hirst and
Thompson which attempts to minimize the significance of international-
74

ization. However, as we saw earlier, the only limits on the internation-


alized market economy that this approach views as feasible are various
'regulatory controls' which, of course, have very little in common with the
sweeping social controls that social societarians have in mind when they
discuss, abstracting from the present internationalized market economy,
the limits that civil society networks should impose on markets (drastic
reduction of inequalities, massive creation of jobs, etc.).
It is therefore clear that the civil societarians, who castigate radical
socialists and supporters of the democratic project as Utopians, are in fact
much less realistic than them when they suggest that the clock could be
moved back to the period of statism, that is, to a period when the market
economy was characterized by a significantly smaller degree of inter-
nationalization than at present. So, the civil societarian approach is both
Utopian, in the negative sense of the word, and a-historical.
It is Utopian, especially today, because, in effect, it is in tension with
both the state and the internationalized market economy. As regards the
tension with the state, neoliberalism has shown how easy it is for the state
to undermine effectively the institutions of the civil society. Also, as
regards the tension with the internationalized market economy, it is well
known that there is an inverse relationship between the degree of com-
petitiveness and the level of development of the civil society's institutions:
the more developed these institutions are (e.g. trade unions) the lower the
degree of international competitiveness, as the case of Sweden has shown.
So, given that neither social democrats nor their fellow travellers in the

161
TOWARDS AN INCLUSIVE DEMOCRACY

Green movement see the outcome of the inevitable tension between the
civil society, on the one hand, and the state and the market economy, on
the other, in terms of the replacement of the latter by the former, it is not
difficult to predict that any enhancement of the civil society will have to be
compatible with the process of further internationalization of the market
economy and the implied role of the state. In other words, the 'enhance-
ment' of civil society under today's conditions would simply mean that the
ruling political and economic elites will be left undisturbed to continue
dominating society, while, from time to time, they will have to try to
address the demands of the civil societarians, provided, of course, that these
demands are not in direct conflict with their own interests and the
demands of competitive production. In this sense, the civil societarian
approach could play today a crucial ideological role in the sense of
justifying' the status quo from the Left's point of view.
Also, the civil societarian approach is fundamentally a-historical, since it
ignores the structural changes which have led to the present neoliberal
consensus and the internationalized market economy. In other words, it
ignores the fact that the tendency to minimize social controls on the
market, which today is dominant everywhere, is not simply a matter of
policy: it reflects fundamental changes in the form of the market economy
which implies that every attempt towards an effective social control of the
market necessarily comes into conflict with the requirements, in terms of
competitiveness, for the reproduction of today's growth economy.
In this sense, the trend to enhance civil society is even more Utopian than
the statist trend. When even the seizure of the omnipotent state machine by
a social-democratic party can eventually lead to social liberalism (as in France
in the 1980s), one can easily assess the chances of enhancing social controls
'from below'. Of course, the civil societarians' problem is not that they do not
base their strategy on an effort to seize state power (the traditional statist
tactics) but rather on a strategy of social transformation 'from below'. The
75

problem lies in the fact that their approach takes for granted the entire
institutional framework of the market economy, representative democracy
and the nation-state and therefore is as ineffective as that of the Right in
dealing with the multidimensional crisis.
Thus, the adoption, first, of the market economy means that every
attempt by autonomous institutions (for example, labour unions, eco-
logical movements, etc.) at an effective control of the market - in order to
achieve social, ecological and other aims — is in dire contradiction with the
logic and dynamics of the internationalized economy. Inevitably, any
attempt to press for similar controls will lead to the adoption of insignifi-
cant half-measures, which have to be compatible with the institutional
framework (see, for example, the fiasco of Rio's 'Earth' Conference).

162
THE CRISIS OF THE GROWTH ECONOMY

The adoption, second, of representative democracy means that the


direct democracy 'injections' proposed by the advocates of this tendency,
in fact, function as inoculations against direct democracy. The funda-
mental precondition for the creation of an active citizen's consciousness is
that the citizens themselves (and not others 'on their behalf) should effect
the political process. Hence, the supposed 'democratic' proposals merely
reinforce citizens' passivity, misleading them to believe that they exercise
political power, when, in fact, the latter remains firmly the privilege of the
few, and the many are relegated to the role of 'pressure groups' - now
baptized as 'counter-powers'!
Finally, the adoption of the statist framework means that the effective
existence of autonomous institutions is possible only insofar as they are
compatible with the objectives of the state. From the moment this
condition is not met, state power will undermine the power of auto-
nomous institutions (see, for example, the crippling of British labour
unions under Thatcherism) or even proceed to their dismandement (see,
for instance, the break-up of the Greater London Council, when it started
creating problems for the Thatcherite neoliberal policies). Therefore,
irrespective of whether one accepts the theory proposed today by some
modem anarchists that not only is the state not a class instrument but that
76

it also has its own interests and actors, the case may be supported, both
theoretically and historically, that any attempt to 'sublate' state power with
autonomous institutions (as, for instance, James O'Connor suggests) is
77

doomed to failure. For example, one could show that the attempt to
reinforce civil society, if successful, would lead to a decrease in the
economic surplus (part of which is used to reproduce the state mechanism)
and, therefore, it would necessarily incur the state's counter-attempt to
undermine it. Thus, the dialectic of tension between state and auto-
nomous institutions makes this 'sublation' impossible, since it necessarily
leads either to a decorative role for the 'autonomous' institutions, or to
their dissolution by the state.
In conclusion, the development of civil society institutions has no
chance whatsoever either of putting an end to the concentration of power,
or of transcending the present multidimensional crisis. This conclusion
may be derived from the fact that the ultimate aim of civil societarians is to
improve the functioning of existing institutions (state, parties, market), in
order to make them more responsive to pressures from below when, in
fact, the crisis is founded on the institutions themselves and not on their
malfunctioning! In other words, in the present internationalized market
economy, the need to minimize the socio-economic role of the state is no
longer a matter of choice for those controlling production. It is a necessary
condition for survival. This is particularly so for European capital that has

163
TOWARDS AN INCLUSIVE DEMOCRACY

to compete with capital blocs which operate from bases where the social-
democratic tradition of statism was never strong (the USA, the Far East).
But, even at the planetary level, one could seriously doubt whether it is still
possible to enhance the institutions of civil society within the context of
the market economy. Granted that the fundamental aims of production in
a market economy are individual gain, economic efficiency and growth,
any attempt to reconcile these aims with an effective 'social control' by the
civil society is bound to fail since, as historic experience with the statist
phase has shown, social control and market efficiency are irreconcilable
objectives (it is a different matter that some social controls, e.g. protec-
78

tionism, may be useful to promote development at the early stages). By the


same token, one could reasonably argue that the central contradiction of
the market economy today is the one arising from the fact that any
effective control of the ecological implications of growth is incompatible
with the requirements of competitiveness, which the present phase of the
marketization process imposes.
The very fact that even neoliberals talk today about the need to combine
the civil society with the free market is indicative of how radical the
demand to enhance the civil society is. Thus, following the extremities of
Thatcherism and Reaganomics, which led to an explosion of unemploy-
ment and poverty at socially intolerable levels, neoliberals seem to adopt
the supposedly 'radical' demand for the enhancement of the civil society.
It is not therefore surprising that even the British Institute of Economic
Affairs, a neoliberal think-tank which initiated many Thatcherite ideas, has
come out in favour of 'civic capitalism' based on free market ideas with an
emphasis on solidarity and mutual consideration (on the lines of friendly
societies, etc.).
79

Towards a new liberatory approach


The crucial question today is whether the protection of human life (which
implies the satisfaction of, at least, all basic human needs) as well as the
effective protection of the environment are compatible with the market-
ization process or whether, instead, the whole market system has to be put
away. If we accept the case of incompatibility that I tried to support above,
one may conclude that the aim to create effective self-protection mechanisms
for society, through enhancing the civil society, is even more Utopian than the
previous attempt to achieve the same aim through enhancing the state. Any
attempt to enhance autonomous social institutions (trade unions, municipal-
ities, etc.) within the framework of the market economy is futile, as long as it
does not seek to transcend the market economy itself. The reason is that any
such attempt will be incompatible with the requirements of competitiveness
(of the country, or the economic bloc, concerned).

164
THE CRISIS OF THE GROWTH ECONOMY

Therefore, there is an imperative need today to develop a new libera-


tory approach which sees the causes of the present multidimensional crisis
in terms of the concentration of power that is implied by any non-
democratic institutional framework, either of the market economy or of
the socialist statism variety. So, what is needed to open the way for new
forms of social organization is the development of a similar mass con-
sciousness about the failure of 'actually existing capitalism' to the one that
led to the collapse of 'actually existing socialism'. Today, there is a pressing
need to transcend both the neoliberal market economy and socialist statism
in order to put an end to economic misery, which oppresses the majority
of the world's population, and to arrest the ecological destruction which
threatens us all. Failure to create alternative democratic forms of social
organization means that, as the present crisis intensifies, the 'solutions' to
the social and ecological problems that will be given by 'actually existing
capitalism' in the future, are, inevitably, going to be increasingly author-
itarian in character.
Thus, roughly 100 years after the adherents to socialist statism, which
collapsed even before the Soviet regime had the chance to celebrate its 75th
birthday, prevailed within the international socialist movement, it is becom-
ing increasingly clear that the autonomy of the social individual can only be
achieved in the context of democracy - in other words, in the framework of
a structure and a process that, through direct citizen participation in the
decision-making and implementing process, ensures the equal distribution of
political, economic and social power among them. The next part of this book
will outline a proposal for an inclusive democracy.

Notes
1. Louis Uchitelle and N.R. Kleinfield, International Herald Tribune (6 March
1996).
2. L. Thurow, Head to Head: The Coming Economic Battle Among Japan, Europe
and America (Brealy, 1992).
3. Louis Uchitelle and N.R. Kleinfield, International Herald Tribune.
4. Associated Press/Eleflherotypia, 2 April 1996.
5. International Labor Organization (ILO), Yearbook of Labor Statistics
(Geneva: ILO 1994).
6. All the calculations in the text are based on the World Development Report
1995, World Bank, Tables 1 and 5.
7. Ted Trainer, Developed to Death (London: Green Print, 1989), p. 120.
8. According to the International Labor Organization, in 1993, 1.1 billion
people lived in poverty conditions, whereas an earlier World Bank report
classified one-third of the South's population as poor; World Development
Report 1990, p. 28.
9. Cornelius Castoriadis, 'The era of generalized conformism', lecture given at
Boston University on 19 September 1989 in a symposium under the general

165
TOWARDS AN INCLUSIVE DEMOCRACY

title Ά metaphor for our times' (published in The Broken World (Athens:
Upsilon, 1992) (in Greek), p. 25).
10. The Guardian (15 Oct. 1993).
11. John Gray, The Guardian, 20 Nov. 1995.
12. Martin Woolacott, 'The march of a martial law', The Guardian (20 Jan.
1996).
13. Geoff Mulgan, Ά high-stake society', The Guardian (30 Jan. 1996).
14. Peter Kellner, 'Jobs and homes worries haunting British voters', The Observer
(5 May 1996).
15. Louis Uchitelle and N.R. Kleinfield, International Herald Tribune.
16. Will Hutton, The State We're In (London: Jonathan Cape, 1995), p. 108.
17. See, e.g., Thomas S. Kuhn, The Structure of Scientific Revolutions (Chicago:
University of Chicago Press, 1970); Imre Lakatos, Criticism and the Growth of
Knowledge (Cambridge: Cambridge University Press, 1970); Paul Feyer-
abend, Against Method (London: Verso, 1975); and Derek Phillips, Abandon­
ing Method (San Fransisco and London: Jossey-Bass, 1973).
18. On the crisis in economic methodology in particular, see, e.g., Daniel Bell
and Irving Kristol, The Crisis in Economic Theory (New York: Basic Books,
1981); Ken Kole et al.,Wliy Economists Disagree (London and New York:
Longman, 1983); Homa Katouzian, Ideology and Method in Economics
(London: Macmillan, 1980); T.W. Hutchinson, Knowledge and Ignorance in
Economics (Oxford: Blackwell, 1977).
19. For an extensive bibliography on this subject, see Chapter 8.
20. Cornelius Castoriadis, 'The era of generalized conformism'.
21. See, for instance, Greg Easterbrook, A Moment of the Earth (New York:
Penguin, 1995).
22. Carbon dioxide concentrations, measured in parts per million by volume
(taken from ice-core samples) were at the level of about 280 for the period
1000-1750 but at the end of the millennium have reached a level of 361; Paul
Brown, The Guardian (13 July 1996).
23. John Gribbin, 'Climate and ozone', The Ecologist, Vol. 21, No. 3 (May/June
1991).
24. See, for instance, The Guardian/'Greenpeace, Ά report into the environ­
mental forces shaping our future', The Guardian (2 June 1994).
25. Polly Ghazi, The Observer (11 April 1993).
26. The Observer (24 March 1996).
27. Tracey Clunies-Ross and Nicholas Hildyard, 'The politics of industrial
agriculture', The Ecologist, Vol. 22, No. 2, March/April 1992, p. 67.
28. Tracey Clunies-Ross and Nicholas Hildyard, 'The politics of industrial
agriculture', p. 67.
29. For a discussion of such matters, see, for instance, Andrew Dobson, Green
Political Thought (London: Routledge, 1990, 1995).
30. For an example of liberal neo-classical economics being used in the analysis
of environmental problems, see Michael Common, Environmental and Re­
source Economics (London: Longman, 1988).
31. See the works of Murray Bookchin: for instance, The Ecology of Freedom
(Montreal: Black Rose, 1991); The Philosophy of Social Ecology (Montreal:
Black Rose, 1995); From Urbanization to Cities: Towards a New Politics of
Citizenship (London: Cassell, 1995).
32. For a useful description of eco-socialism and its differences from eco-

166
THE CRISIS OF THE GROWTH ECONOMY

anarchism and other Green tendencies, see David Pepper, Eco-Socialism:


From Deep Ecology to Social Justice (London: Routledge, 1993), and Modem
Environmentalism (London: Routledge, 1996).
33. World Commission on Environment and Development, Our Common Future
(United Nations, 1987).
34. World Commission on Environment and Development, Our Common
Future, p. 87.
35. The Report, for instance, states that the aim should be 'an economy geared
to growth and the elimination of world poverty'; World Commission on
Environment and Development, Our Common Future, p. 18. Similarly, it is
stated that sustainable development 'requires . . . an assurance that those poor
get their fair share of the resources', p. 8.
36. The Report calls for economic growth and at the same time it takes for
granted that this is compatible with the aim to 'enhance' and 'expand the
environmental resource base', World Commission on Environment and
Development, Our Common Future, pp. 1, 364.
37. World Commission on Environment and Development, Our Common
Future, p. 51.
38. Ted Trainer, Ά rejection of the Brundtland Report', p. 74.
39. See, for instance, John M. Gowdy, 'Progress and environmental sustain­
ability', Environmental Ethics, Vol. 16, No. 1 (Spring 1994).
40. Richard Douthwaite, The Growth Illusion (Devon: Resurgence, 1992),
Ch. 15.
41. John M. Gowdy, 'Progress and environmental sustainability', p. 52.
42. E.G. Vallianatos, 'Subversive theory: ecology, gaiocentric sustainable
development and the Third World', Society and Nature, Vol. 3, No. 1 (1995),
pp. 93-116.
43. E.G. Vallianatos, 'Subversive theory', p. 108.
44. E.G. Vallianatos, 'Subversive theory', pp. 108-9.
45. For a critique of the 'neutrality of technology' thesis, see Cornelius Castor-
iadis, Philosophy, Politics, Autonomy, p. 192. See also Frances Stewart's study
which shows that the way in which technological choices are made in
practice is anything but 'neutral'; Frances Stewart, Technology and Under­
development (London: Macmillan, 1978), Ch. 1.
46. Ted Trainer, Developed to Death, p. 3.
47. Ted Trainer, The Conserver Society (London: Zed Books, 1995), p. 9.
48. Ted Trainer, The Conserver Society, p. 12.
49. Ted Trainer, The Conserver Society, p. 13.
50. See Ted Trainer, 'What is development?', Society and Nature, Vol. 3, No. 1
(1995), pp. 26-56.
51. Ted Trainer, Developed to Death, p. 204.
52. Ted Trainer, The Conserver Society, p. 220.
53. See, e.g., Henri Lepage, Tomorrow, Capitalism, The Economics of Economic
Freedom (London: Open Court, 1982); Nick Bosanquet, After the New Right
(London: Heinemann, 1983); Mark Hayes, The New Right in Britain
(London: Pluto Press, 1994).
54. See Takis Fotopoulos, 'Economic restructuring and the debt problem: the
Greek case', International Review of Applied Economics, Vol. 6, No. 1 (1992),
pp. 38-64.

167
TOWARDS AN INCLUSIVE DEMOCRACY

55. A. Atkinson et al, Income Distribution in OECD countries (Paris: OECD,


1995), p. 47.
56. UN Development Program, Human Development Report, 1992 (New York:
Oxford University Press, 1992).
57. UN Development Program, Human Development Report, 1996 (New York:
Oxford University Press, 1996); see also Duncan Smith, In Search of Social
Justice (London: The New Economics Foundation, 1995).
58. Edward Wolff, 'How the pie is sliced: America's growing concentration of
wealth', The American Prospect (Summer 1995).
59. Francis Green et al, 'Income inequality in corporatist and liberal economies:
a comparison of trends within OECD countries', International Review of
Applied Economics, Vol. 8, No. 3 (1994).
60. See John Ely, 'Libertarian ecology and civil society'; and Konstantinos
Kavoulakos, 'The relationship of realism and utopianism: the theories of
democracy of Habermas and Castoriadis', Society and Nature, Vol. 2, No. 3
(1994).
61. Michael Walzer, 'The civil society argument' in Dimensions of Radical
Democracy, Chantal Mouffe (ed.) (London: Verso, 1992, 1995), pp.
89-107.
62. 'Now Derrida, Lacan, Lyotard, Kristeva, etc. .. . write things that I also don't
understand . . . no one who says they do understand can explain it to me and
I haven't a clue as to how to proceed to overcome my failures', Noam
Chomsky 'On "theory" and "post-modern cults" ', Upstream Issues (1996).
63. Michael Walzer, 'The civil society argument', p. 89.
64. Michael Walzer, 'The civil society argument', p. 91.
65. Michael Walzer, 'The civil society argument', p. 92.
66. Michael Walzer, 'The civil society argument', p. 105.
67. Michael Walzer, 'The civil society argument', p. 95.
68. Michael Walzer, 'The civil society argument', p. 98.
69. Michael Walzer, 'The civil society argument', p. 97.
70. Michael Walzer, 'The civil society argument', p. 99.
71. Michael Walzer, 'The civil society argument', p. 100.
72. Michael Walzer, 'The civil society argument', p. 100.
73. Michael Walzer, 'The civil society argument', p. 104.
74. Paul Hirst and Grahame Thompson, Globalization in Question (Cambridge:
Polity Press, 1996).
75. See, for instance, Hilary Wainwright, Arguments for a New Left, Answering the
Free Market Right (Oxford: Blackwell, 1994), Ch. 3.
76. See April Carter, Marx: A Radical Critique (Brighton: Wheatsheaf, 1988), and
Outline of an anarchist theory of history' in For Anarchism: History, Theory
and Practice, D. Goodway (ed.) (London: Routledge, 1989), pp. 176—97.
77. James O'Connor, 'Socialism and ecology', Society and Nature, Vol. 1, No. 1
(1992), pp. 117-29.
78. See also M. Olson, The Rise and Decline of Nations (New Haven, Connecticut:
Yale University Press, 1988).
79. See David G. Green, Reinventing Civil Society (London: IEA, 1993).

168
PART II

Towards a Confederal Inclusive


Democracy
CHAPTER 5

Towards a New Conception of


Democracy

The aim of this chapter is twofold: first, to show the incompatibility of


democracy with any form of concentration of power and to examine the
implication that neither representative democracy nor the market econ-
omy can be characterized as political or economic democracy respectively;
and second, to develop a new conception of inclusive democracy which
extends the public realm to the economic, social and ecological
domains.
The first section demonstrates the incompatibility of democracy with
the two versions of the growth economy (capitalist and 'socialist'). The
second section delineates the relationship of the conceptions of democracy
to the various conceptions of freedom. Also, the distinction between
'statist' and non-statist forms of democracy is introduced. In the third
section the main conceptions of democracy are examined and contrasted.
It is shown that the various conceptions of 'radical' democracy that the
'Left' is developing at the moment have little in common with the classical
meaning of democracy as equal sharing of power.
In the final section, the conception of inclusive democracy is developed
and its components are examined, i.e. political, economic, ecological, as
well as 'democracy in the social realm'. It is stressed that the new
conception takes for granted that democracy is not just a particular
structure implying political and economic equality, but a process of social
self-institution and a project - a theme which is examined further in
Chapter 8. Finally, the various conceptions of citizenship are considered
and contrasted with the conception of citizenship implied by inclusive
democracy.

Democracy and the growth economy


As we saw in Chapter 2, the grow-or-die dynamics of the market
economy led to the growth economy, which, in the twentieth century,
took the form of either a capitalist growth economy or a 'socialist' growth

171
TOWARDS AN INCLUSIVE DEMOCRACY

economy — both types implying a high degree of concentration of


economic power. However, as economic concentration is incompatible
with the spreading of political power, it is no wonder that the growing
concentration of economic power has been accompanied by a corre-
sponding concentration of political power. Therefore, as all conceptions of
democracy imply the dispersion of power, to the extent that both historical
versions of the growth economy imply a high degree of concentration of
power, they are also incompatible with democracy. But let us examine in
more detail the compatibility of democracy with the two versions of the
growth economy.

The compatibility of democracy with the capitalist growth


economy
The incompatibility of democracy with the capitalist growth economy is
based on the fact that the main elements of this type of growth economy,
growth and marketization, are incompatible with democracy. As regards,
first, growth, the grow-or-die dynamic of the capitalist growth economy
has led not only to concentration of economic power but also to concen-
tration of political power. In fact, concentration of political power has
been the functional complement of the concentration of economic power.
Thus, the concentration of political power in the hands of parliamentarians
in the liberal phase has led to an even higher degree of concentration in the
hands of governments and the leadership of 'mass' parties in the statist and
neoliberal phases, at the expense of parliaments. Furthermore, in con-
1

firmation of the historical incompatibility of democracy with capitalist


growth, Robert Basso, a Harvard economist, in an article for the Journal of
Economic Growth (1996), after surveying 100 countries between 1960 and
1990, reaches the conclusion that economic growth rates are negatively
associated with greater democracy!
As regards, second, marketization, namely, the historical process that
since the time of the emergence of the market economy involved the
phased removal of social controls over the market, the incompatibility of
this process with democracy is obvious. As we saw earlier, the minimiza-
tion of social controls on the market is in the interest of, and has always
been pursued by, the small minority who own and/or control the means
of production. So, since in a capitalist growth economy it is those who are
not in control of the economic process who constitute the vast majority of
the population, the more oligarchic the form of political organization, the
more amenable to the marketization process the economy is.
It is not therefore surprising that the present internationalized phase of

172
A NEW CONCEPTION OF DEMOCRACY

marketization, which implies further concentration of economic power,


has been accompanied by a parallel concentration of political power. So,
although it is true that today, as we approach the new millennium, we see
the end of sovereignty, as Thomas Martin points out, it is not sovereignty
2

in general that withers away but the nation-state's sovereignty, particularly


its economic sovereignty. The decline of state sovereignty is directly
linked to the present internationalized phase of the market economy and
the consequent withering away of the nation-state. In this context, one
may argue that state sovereignty is being replaced by market sovereignty
on the one hand and a form of supra-national sovereignty on the other.
The former means that, today, more than ever before, it is the market
which defines effective human rights, not just economic rights, but even
who can really exercise his or her human rights in general. The latter
means that, at present, political and economic power is concentrated at the
supra-national level of inter-state institutions ('Group of 7', European
Commission) and international organizations (World Trade Organization,
IMF, World Bank) and at the level of the emerging network of city-
regional governments. 3

The combined historical effect of growth and marketization on politics


is that in the capitalist growth economy, politics is converted into state-
craft, with think-tanks - 'the systems analysts of the present hour' —
4

designing policies and their implementation. Furthermore, the con-


5

tinuous decline of the state's economic sovereignty is being accompanied


by the parallel transformation of the public realm into pure administration.
For instance, international central banks are being established, which, in
the future, independent from political control, will take crucial decisions
about the economic life of millions of citizens (see for instance the planned
European central bank that will take over control of the common Euro-
pean currency). Hannah Arendt prophetically described this state of affairs,
although she did not predict that it was the concentration of power at the
top that would lead to pure administration rather than the 'withering away
of the state':

A complete victory of society will always produce some sort of 'communistic


fiction', whose outstanding political characteristic is that it is indeed ruled by
an 'invisible hand', namely by nobody. What we traditionally call state and
government gives place here to pure administration — a state of affairs which
Marx rightly predicted as the 'withering away of the state', though he was
wrong in assuming that only a revolution could bring it about and even more
wrong when he believed that this complete victory of society would mean the
eventual emergence of the 'realm of freedom'. 6

173
TOWARDS AN INCLUSIVE DEMOCRACY

The compatibility of democracy with the 'socialist' growth


economy
As far as the 'socialist' growth economy is concerned, its incompatibility
with democracy is based on the fact that the dominant social paradigm in
the defunct 'actually existing socialism' was grounded on the idea that the
principal goal of human society was the maximization of production and
the development of productive forces. Therefore, to the extent that the
achievement of this goal implied the concentration of economic and
political power in the hands of the bureaucratic party elite and planners,
concentration of power was inevitable. Furthermore, the fact that the
dominant social paradigm was supposed to be grounded on a 'science'
(Marxism) implied the imperative need to 'prove' it, in the sense of out-
producing all competitor economic systems. There was, therefore, no
doubt whatsoever in the minds of the Soviet elite about what would have
to be sacrificed in any possible clash between the dominant social paradigm
and democracy. No wonder, therefore, that as early as 1920 Lenin was
declaring that 'in the final analysis every kind of democracy, as political
superstructure in general... serves production', reminding the romantics
who wanted to go back to workers' control and industrial democracy that
'Industry is indispensable, democracy is not'. 7

So, whereas the original Leninist project for the Soviet democracy, as
expressed in The State and Revolution, was about the transformation of
power relations, the Soviet elite, from 1920 onwards, consistently main-
tained the view (no doubt 'external' events have also played a significant
role in this) that socialism consisted wholly in the equality of ownership
relations and not at all in the equality of power relations. The incentive was
obvious: to achieve the goal of maximizing production, which was
identified as the main goal of socialism. As Harding points out:
Socialism was conceived of as the maximisation of production which could
only be achieved by state ownership of the means of production and the
implementation of a national plan for the allocation of all resources . .. the
trick was . . . to convince its adherents that the essential matters that concern
society were not at all political matters that involved the power of some over
others . . . but that they were, rather, matters whose optimal resolution
proceeded from the correct application of objective or scientific knowledge. 8

History, therefore, has shown in an unambiguous way that democracy


is incompatible with both versions of the growth economy. The crucial
question that arises here is whether it is not only the growth economy — as
it developed historically - which is incompatible with democracy, but the
very liberal and socialist conceptions of democracy, on which the two
versions of the growth economy were founded.

174
A NEW CONCEPTION OF DEMOCRACY

Democracy, freedom and autonomy


Few words, apart perhaps from socialism, have been so widely abused
during the twentieth century as the word 'democracy'. The usual way in
which the meaning of democracy has been distorted, mostly by liberal
academics and politicians but also by libertarian theoreticians, is by
confusing the presently dominant oligarchic system of liberal 'democracy'
with democracy itself. A good illustration of this distortion is offered by
the following introduction to the subject in a modern textbook on
democracy:
The word democracy comes from the Greek and literally means rule by the
people. It is sometimes said that democratic government originated in the city-
states of ancient Greece and that democratic ideals have been handed down to
us from that time. In truth, however, this is an unhelpful assertion. The
Greeks gave us the word but did not provide us with a model. The
assumptions and practices of the Greeks were very different from those of
modern democrats. 9

Thus, the author, having asserted that democracy is a kind of 'rule' (an
error repeated by several libertarians and anarchists today), then goes on to
argue that:
if ruling is taken to mean the activity of reaching authoritative decisions that
result in laws and regulations binding upon society, then it is obvious that
(apart from occasional referendums) only a small minority of individuals can
be rulers in modern, populous societies. So, for the definition to be opera-
tional, ruling must be taken in the much weaker sense of choosing the rulers
and influencing their decisions. 10

The author, therefore, having concluded that 'an objective and precise
definition of democracy' is not possible, goes on to devote the rest of the
11

book to a discussion of the Western regimes, which he calls 'democracies'.


However, as I will try to show below, the modern concept of democracy
has hardly any relation to the classical Greek conception. Furthermore, the
current practice of adding several qualifying adjectives to the term democ-
racy has further confused the meaning of it and created the impression that
several forms of democracy exist. Thus, liberals refer to 'modern', 'liberal',
'representative', or 'parliamentary' democracy, social democrats talk about
'social', 'economic' or 'industrial' democracy, and finally Leninists used to
speak about 'soviet' democracy, and, later, 'people's' democracies to
describe the countries of 'actually existing socialism'.
But, as this chapter will attempt to show, there is only one form of
democracy at the political level, that is, the direct exercise of sovereignty
by the people themselves, a form of societal institution which rejects any

175
TOWARDS AN INCLUSIVE DEMOCRACY

form of 'ruling' and institutionalizes the equal sharing of political power


among all citizens. The hypothesis we make that there is only one form of
political democracy has two important implications.
The first implication is that all other forms of so-called democracy
('representative', 'parliamentary', etc.) are merely various forms of 'oli-
garchy', that is, rule by the few. This implies that the only adjectives that
are permissible to precede democracy are those which are used to extend
its scope to take into account democracy at the economic or broader social
domains. The use of such adjectives is justified by the fact that economic
democracy, or democracy in the workplace and so on, was indeed
unknown to Athenians for whom only political activity belonged to the
public realm. Thus, as Hansen points out, 'historians agree that equality in
Athens was a purely political concept that never spread to the social and
economic spheres'. This is why in this book, to denote the extension of
12

the classical conception of democracy to the social, economic and eco-


logical realms, the adjective 'inclusive' precedes the word democracy.
The second implication of our hypothesis is that the real meaning of the
arguments advanced by the 'civil societarian' 'Left' in favour of 'deep-
ening' democracy is to make the present regimes in the West, that have
aptly been characterized by Castoriades as 'liberal oligarchies', less oligar-
13

chic. A typical example of such a pseudo-democratic argument is given by


David Beetham that 'disputes about the meaning of democracy which
purport to be conceptual disagreements are really disputes about how much
[emphasis added] democracy is either desirable or practicable . . . of any
existing set of political arrangements it is thus meaningful to ask how they
might be made more democratic'. Thus, the author, after bypassing the
14

crucial issue of the concept of democracy by implicitly assuming that the


difference between the classical and the liberal conception of democracy is
just quantitative (see p. 185), derives the convenient conclusion that, since
the present liberal democracy is a democracy, the only issue is how to make
it more democratic! No wonder that the same author, on the basis of such
flimsy premises, easily derives the pontifical judgement that 'there is no
serious democratic alternative', and he goes on undisturbed to discuss the
15

question of the 'limitations' of democratization, i.e. how far democratiza-


tion can proceed without threatening the present 'democratic' order
itself.
But any conception of democracy crucially depends on the meaning
assigned to freedom and autonomy. This implies that our starting point in
examining the various conceptions of democracy should be a discussion
of the meaning of freedom and autonomy — terms that, like democracy
and socialism, have so much been used and abused, particularly in this
century.

176
A NEW CONCEPTION OF DEMOCRACY

How to define freedom?


One useful starting point in defining freedom is the distinction that Isaiah
Berlin introduced between what he called the 'negative' and the 'posi-
16

tive' concepts of liberty/freedom (he used the terms interchangeably). The


former referred to the absence of restraint, that is, the freedom for the
individual to do whatever s/he wants to do ('freedom from'), whereas the
latter referred to the freedom 'to do things', to engage in self-development
or participate in the government of one's society ('freedom to'). One
could, roughly, argue that, historically, the negative concept of freedom
was adopted by liberals, individualistic anarchists and libertarians, whereas
the positive concept was used by socialists and most anarchists.
Thus, the negative concept of freedom was developed by liberal
philosophers like Thomas Hobbes, Jeremy Bentham, John Stuart Mill and
others, whose main consideration was to establish criteria for determining
the proper limits of state action. In liberal philosophy, citizens are free
insofar as they are not constrained by laws and regulations. It is therefore
obvious that the liberal conception of freedom presupposes the power
relations implied by the existence of the state and the market, as long as
they are 'within the law'. In other words, the liberals' conception of
freedom presupposes the existence of the state as separate from society; in
this sense, their conception of democracy is a 'statist' one.
The negative concept of freedom has been criticized on several
grounds. Liberals themselves have criticized this conception as it does not
imply even the very right to choose rulers in a liberal democracy, which
17

is clearly a 'freedom to' and not a 'freedom from'. But even more
important is the philosophical criticism that human beings have always
lived in communities bound together by social rules and regulations and
that, therefore, their history is not just a history of isolated individuals
coming together to form a civil society, as liberal philosophers like Hobbes
and Locke assumed. In other words, human values are socially determined,
and social rules and regulations to uphold them do not represent a
restriction on some pre-existing freedom but part of the conditions of a
satisfactory life.
18

On the other hand, the positive concept of freedom is usually associated


with self-realization through the political institution of society, which
supposedly expresses the 'general will'. But then, of course, the question
immediately arises: which type of societal institution could express this
general will? Historically, the positive conception of freedom, not unlike
the negative conception, has been associated with the 'statist' conception
of democracy; the state is separated from society and is supposed to express
the general will. In particular, during the period from the beginning of the
twentieth century until World War I I , the positive concept of freedom

177
TOWARDS AN INCLUSIVE DEMOCRACY

was fashionable among statists of all persuasions: from Nazis to Stalinists.


No wonder that the collapse of statism as an ideology and political practice
led to the corresponding decline of the positive concept of freedom and
the present flourishing of its negative conception. However, as I shall show
below, there is no intrinsic relationship between the positive concept
of freedom and the 'statist' form of democracy. In fact, the opposite is
true. A statist form of democracy is incompatible with any concept
of freedom, positive or negative, given its fundamental incompatibility
with both self-determination and (individual and collective)
autonomy.
For all that, the ambivalent character of the connection between the
statist form of democracy and freedom led to a situation where the positive
conception of freedom in terms of the conscious control over society and
nature was adopted by both the statist and the non-statist wings of the Left.
Thus, on the state socialist side, Engels defined freedom as 'the control
over ourselves and over external nature'. Also, according to Kolakowski,
19

for Marxists, 'freedom is the degree of power that an individual or a


community is able to exercise over the conditions of their own life'. On 20

the anarchist side, Bakunin had exactly the same notion of freedom, which
he defined as 'the domination over external things, based upon the
respectful observance of the laws of Nature'. Similarly, Emma Goldman
21

explicitly adopts a positive concept of freedom: 'True liberty . . . is not the


negative thing of being free from something . . . real freedom, true liberty
is positive: it is freedom to something; it is the liberty to be, to do.'22

Finally, today's ideological hegemony of liberal ideas has influenced


several libertarians who resort to individualistic conceptions of freedom.
McKercher, for instance, defines freedom 'as the ability to choose between
alternatives'. However, this conception of freedom separates the in-
23

dividual's self-determination from that of the community's, in other


words, the individual's self-determination from that of the social in-
dividual's. As a result, the link between the political institution of society
and the social individual's self-determination is broken (no wonder that
Milton Friedman's best seller was entitled Free to Choose ). In fact, even if
24

we qualify the definition as the equal ability to choose, to bring in the ethics
of equality and democracy (what McKercher calls 'the qualitative areas of
choice' ), still, the definition does not explicitly posit the question of the
25

political institution of society. But it is society's political institution which


conditions in a decisive way what 'the alternatives' are and therefore the
ability itself to choose. It is not therefore accidental that such a definition
of freedom is amenable to being attached to the ethos of individualism,
private property and capitalism. Nor is it surprising that the adoption
of such a definition of freedom could easily lead to a situation

178
A NEW CONCEPTION OF DEMOCRACY

where 'freedom becomes individualism, and individualism becomes the


possession of property, and possession becomes democracy', so that, at
the end, 'private property and capitalism become synonymous with
"democracy" '. 26

To my mind, the best way to define freedom is to express it in terms of


individual and collective autonomy. Such a definition of freedom not only
combines individual freedom with collective freedom, rooting firmly the
freedom of the individual in the democratic organization of the com­
munity, but it also transcends both liberalism and socialist statism,
individualism and collectivism.
The English translation of autonomy, as Murray Bookchin points out, is
used to denote personal freedom or self-government and therefore creates
'a disjunction between the material and political that would have been
alien to the Greek idea of independence'. However, the original Greek
27

meaning of the word had a definite political dimension, where personal


autonomy was inseparable from collective autonomy. The term autonomy
(autonomic!) comes from the Greek word 'αυτο-νομος' (autonomos),
which means (to give to) oneself one's law. On the other hand, the Greek
word for freedom (eleutheria) had a broader meaning than autonomy,
according to context. Thus, as Hansen points out, at least three different
meanings are attested in the sources: in the social context, eleutheria
contrasted freedom to slavery; in the constitutional context, it was asso­
ciated both with political participation in the public realm and personal
freedom in the private realm; whereas in the political context, 'eleutheria in
the sense of autonomia was the freedom of the polis, which is different from
freedom within the polis'. 28

So, autonomy refers to 'a new eidos within the overall history of being:
a type of being that reflectively gives to itself the laws of its being'. In 29

other words, autonomy implies a process of explicit self-institution:

The poleis - at any rate Athens, about which our information is most
complete - do not stop questioning their respective institutions; the demos
goes on modifying the rules under which it lives. . . . This movement is a
movement of explicit self-institution. The cardinal meaning of explicit self-
institution is autonomy: we posit our own laws. . . . The community of
citizens - the demos — proclaims that it is absolutely sovereign (autono­
mos, autodikos, autoteles - self-legislating, self-judging, self-governing -
in Thucydides' words). 30

Therefore, an autonomous society is a society capable of explicitly self-


instituting itself, in other words, capable of putting into question its already

179
TOWARDS AN INCLUSIVE DEMOCRACY

given institutions and what I will call the dominant social paradigm, namely,
the system of beliefs, ideas and the corresponding values, which is asso-
ciated with these institutions. In this sense, a tribal society which is not
capable of questioning tradition, a religious society not questioning divine
law, and, finally, a Marxist society which is incapable of questioning the
dominant social paradigm are all examples of heteronomous societies,
irrespective of the degree of political and economic equality they may have
achieved.
The above definition of freedom in terms of autonomy has three very
important theoretical implications. First, it implies democracy. Second, it
implies the transcendence of the traditional division between individual-
ism and collectivism, liberalism and socialist statism. Finally, it implies that
freedom cannot and should not be based on any preconceptions about
human nature or on any divine, social or natural 'laws' about social
evolution. The first two implications will be examined below whereas the
third will be considered in Chapter 8 (see p. 342).
As regards the first implication of the definition of freedom in terms of
autonomy, i.e. the connection between autonomy and democracy, an
autonomous society is inconceivable without autonomous individuals and
vice versa. Thus, in classical Athens no citizen is autonomous unless he
participates equally in power, that is, unless he takes part in the democratic
process. In general, as Castoriadis observes, no society is autonomous
unless it consists of autonomous individuals, because 'without the auton-
omy of the others there is no collective autonomy — and outside such a
collectivity I cannot be effectively autonomous'. It is therefore obvious
31

that in the context of an indefinite plurality of individuals belonging to


society, the very acceptance of the idea of autonomy inevitably leads to the
idea of democracy.
In this sense, autonomy and freedom are equivalent terms, although this
is not always clear in the Anglo-Saxon tradition, given its emphasis on
individual autonomy. Furthermore, expressing freedom in terms of auton-
omy directly brings up the issue of whether the project for democracy
should be founded on the citizen's self-reflective choice, rather than on an
'objective' ethic derived from a particular (and necessarily disputable)
reading of natural and social 'evolution'. It is obvious that a definition of
freedom in terms of autonomy is compatible with the former but not with
the latter. It is therefore not surprising that supporters of 'objective' ethics
discard any definition of freedom in terms of autonomy, supposedly
because of its individualistic connotations, despite the fact that its classical
meaning could in no way be associated with exclusively individualistic
conceptions of freedom. 32

180
A NEW CONCEPTION OF DEMOCRACY

Freedom, individualism and collectivism


As regards the second implication, the definition of freedom in terms of
individual and collective autonomy is very useful in the attempt to
transcend the duality of individualism versus collectivism. Thus, the
conception of freedom in terms of autonomy makes clear that the issue is
not, as some modem libertarians present it, a black and white choice
between an 'individualist' tendency (human individuals can be free
to create their world) and a 'collectivist' tendency (the world creates
the individual). The real issue is how we can transcend both these
33

tendencies.
To my mind, this can only be achieved if we recognize the historical fact
that individuals are not absolutely free to create their world, nor does the
world just create the individual. As long as individuals live in a society,
they are not just individuals but social individuals, subject to a process
which socializes them into internalizing the existing institutional frame-
work and the dominant social paradigm. In this sense, they are not just free
to create their world but are conditioned by history, tradition and culture.
Still, this socialization process is broken, at almost all times — as far as a
minority of the population is concerned — and in exceptional historical
circumstances even with respect to the majority itself. In the latter case, a
process is set in motion that usually ends with a change of the institutional
structure of society and of the corresponding social paradigm.
The above statement is just a historical observation, and I will not
attempt to 'ground' it somewhere because any such 'grounding' will
inevitably involve a closed theoretical system — as, for example, is the case
with the Marxian or Freudian interpretations of the socialization process.
This historical observation should be complemented by another one,
which transcends both idealism and materialism. Namely, it is neither
ideological factors alone nor just material factors that determine social
change at any moment in time. Sometimes, the former may have been
more influential than the latter, and vice versa, but usually, as Murray
Bookchin stresses, it is the interaction between the two that is decisive.
34

However, any generalizations aimed at deriving a philosophy of history,


like the ones attempted by Marxists and idealists, are just not possible.
Societies therefore are not just 'collections of individuals' but consist of
social individuals who are both free to create their world, that is, a new set
of institutions and a corresponding social paradigm, and are created by the
world, in the sense that they have to break with the dominant social
paradigm in order to be able to recreate the world.
If we adopt the conception of freedom as individual and collective
autonomy, then neither liberal individualism nor collectivism, particularly
in the form of socialist statism, is compatible with freedom. Liberal

181
TOWARDS AN INCLUSIVE DEMOCRACY

individualism is incompatible with freedom because it implies a negative


conception of freedom, a form of 'democracy' in which the ultimate unit
of society is only the individual and an idea of citizenship in which the
citizen is simply a passive bearer of certain rights (mainly political) and
individual freedoms. Also, socialist statism is incompatible with freedom
because, although it implies a positive conception of freedom, the separa-
tion of state from society (which is supposed to continue throughout the
transitional period up to the communist stage) implies an idea of citizen-
ship in which the citizen is still a passive bearer of rights (albeit political
rights are complemented by full social and economic rights).
It is therefore essential that a new liberatory project should be based
on:
• a conception of freedom in terms of individual and collective autonomy;
and
• a conception of democracy in which the central unit of political life is
the individual as well as the community. This way, the liberatory project
will acquire a universal character which is now missing from the purely
Euro-centric model of liberal 'democracy' that has been exported all
over the world. Thus, as Bhikhu Parekh points out, in several parts of
35

the world they still define the individual in communal terms and do not
regard the atomic liberal individual as the basic unit of society. Also,
there are several multi-communal societies which comprise several
cohesive communities trying to preserve their traditional way of life.
Clearly, the liberal model of democracy is incompatible with all these
societies ('as they understand it, liberalism breaks up the community'); 36

in fact, even the classical democracy model needs drastic amendment to


be compatible with the multi-communal societies.
In this context, recent libertarian attempts to 'reconcile' individualism
and liberalism, on the one hand, with Left libertarianism, on the other,
seem extremely precarious. This applies, for instance, to L. Susan Brown's
attempt to distinguish between what she calls existential individualism
(individualism that stresses freedom as a desirable end in itself) and
instrumental individualism (individualism that sees freedom merely as a
means to achieve egocentric competitive interests), which she assigns to
anarchism and liberalism respectively. 37

But, as Castoriadis points out, 'the idea of autonomy as an end in itself


would lead to a purely formal "Kantian" conception. We wish autonomy
both for itself and in order to be able to do.' One may, therefore, argue
38

that, in fact, there is only one type of individualism, instrumentalist


individualism, which sees individual autonomy as a means to achieve
egocentric competitive interests. Similarly, there is only one type of

182
A NEW CONCEPTION OF DEMOCRACY

collectivism, instrumentalist collectivism, which, in the form of statist


socialism, sees collective autonomy as a means to achieve Progress in the
sense of the development of productive forces.
So, the real point at issue is whether we wish autonomy and freedom in
order to further our egocentric interests, which emanate basically from
property rights, or whether, instead, we wish autonomy and freedom in
order to further our self-development, which is impossible without the
self-development of everybody else in society. In the first instance, we
refer to liberal individualism (what Brown calls instrumental individual-
ism), which is consistent with a negative conception of freedom and an
exclusively individualistic conception of autonomy. In the second in-
stance, ruling out socialist statism for the reasons I mentioned above, we
refer to individual autonomy seen as inseparable from collective auton-
omy. To my mind, Brown's definition of individualism is perfectly
compatible with liberal individualism and incompatible with individual
and collective autonomy. In this sense, her treatment of anarchism and
liberalism confuses the fundamental differences between the two, parti-
cularly with respect to their diametrically opposite conceptions of freedom
and autonomy.

Democracy, sovereignty and the state


The concentration of power is incompatible not only with freedom in the
sense of autonomy but even with freedom in the negative sense of
'freedom from'. It is not therefore accidental that today, when the market
39

economy and liberal democracy lead to an increasing concentration of


economic and political power respectively, neo-liberals and 'libertarians'
40

of the Right try to dissociate conceptually power from freedom. How- 41

ever, the oligarchic character of the present regimes does not just arise
from the fact that real power is in the hands of a political elite, as supporters
of the theory of elitism suggest, or, alternatively, in the hands of an
economic class for whom politicians act directly or indirectly as agents, as
instrumentalist versions of Marxism imply. The oligarchic character of the
present 'democracies', which, in fact, negates any conception of freedom,
is the direct outcome of the fact that the present institutional framework
separates society from the economy and society from the state.
Although the market economy was formed about two centuries ago,
when, within the process of marketization of the economy, most social
controls over the market were abolished, the separation process had begun
earlier, in sixteenth-century Europe. At the political level, the emergence
of the nation-state, at about the same time and place, initiated a parallel
process of concentrating political power, initially in the form of highly
centralized monarchies and later in the form of liberal 'democracies'. From

183
TOWARDS AN INCLUSIVE DEMOCRACY

then on, as Bookchin points out, 'the word "state" came to mean a
professional civil authority with the powers to govern a "body poli-
tic"'.42

It was also during the same sixteenth century that the idea of representa-
tion entered the political lexicon, although the sovereignty of Parliament
was not established until the seventeenth century. In the same way that the
king had once 'represented' society as a whole, it was now the turn of
Parliament to play this role, although sovereignty itself was still supposed
to belong to the people as a whole. However, the doctrine that prevailed
in Europe since the French Revolution was not just that the French people
were sovereign and that their views were represented in the National
Assembly, but that the French nation was sovereign and the National
Assembly embodied the will of the nation. As it was observed:
this was a turning point in continental European ideas since, before this, the
political representative had been viewed in the continent as a delegate.
According to the new theory promulgated by the French revolutionaries . . .
the elected representative is viewed as an independent maker of national laws
and policies, not as an agent for his constituents or for sectional interests.
43

In fact, one may say that the form of liberal 'democracy' that has
dominated the West in the last two centuries is not even a representative
'democracy' but a representative government, that is a government of the
people by their representatives. Thus, as Bhikhu Parekh points out:
Representatives were to be elected by the people, but once elected they were to
remain free to manage public affairs as they saw fit. This highly effective way
of insulating the government against the full impact of universal franchise lies
at the heart of liberal democracy. Strictly speaking liberal democracy is not
representative democracy but representative government. 44

The European conception of sovereignty was completely alien to


Athenians, since the separation of sovereignty from its exercise was
unknown to them. All powers were exercised directly by the citizens
themselves, or by delegates who were appointed by lot and for a short
period of time. In fact, as Aristotle points out, the election by voting was
considered oligarchic and was not allowed but in exceptional circum-
stances (usually in cases where special knowledge was required), and only
appointment by lot was considered democratic. 43

Therefore, the type of 'democracy' that has been established since the
sixteenth century in Europe has had very little in common with the
Athenian democracy. The former presupposes the separation of the state
from society and the exercise of sovereignty by a separate body of
representatives, whereas the latter is based on the principle that sovereignty

184
A NEW CONCEPTION OF DEMOCRACY

is exercised directly by the free citizens themselves. Athens, therefore, may


hardly be characterized as a state in the normal sense of the word. As
Thomas Martin rightly points out, '[d]ecentralized, self-governing com-
46

munities like ancient Athens or medieval Lubeck were not "city-states"


Without centralized authority there is no sovereign; without a
sovereign there is no state.' Bookchin and Castoriadis, also, agree on the
non-statist character of Athens. 47

So, despite the fact that Greek philosophers did speak about sovereignty
in the polis, a fact that some could take as implying the existence of a
48

state, I think that in the case of the Athenian polis we cannot properly
speak of sovereignty and the state. Instead, I would argue that Athens was
a mix of non-statist and statist democracy. It was non-statist as regards the
citizen body, which was 'ruled' by nobody and whose members shared
power equally among themselves, and statist as regards those not qualifying
as full citizens (women, slaves, immigrants), over whom the demos
wielded power.
But let us examine in more detail the historical conceptions of democ-
racy, starting with the classical Athenian conception.

Conceptions of democracy
The Athenian conception of democracy
Although it is, of course, true that power relations and structures did not
disappear in the Polis (not only at the economic level, where inequities
were obvious, but even at the political level, where the hierarchical
structure of society was clear with the exclusion of women, immigrants
and slaves from the proceedings of the ecclesia), still, the Athenian democ-
racy was the first historical example of the identification of the sovereign
with those exercising sovereignty. As Hannah Arendt points out:
[T]he whole concept of rule and being ruled, of government and power in the
sense in which we understand them, as well as the regulated order attending
them, was felt to be prepolitical and to belong to the private rather than the
public sphere . . . equality therefore far from being connected with justice, as
in modern times, was the very essence offreedom: to be free meant to be free
from the inequality present in rulership and to move to a sphere where neither
rule nor being ruled existed. 49

So, it is obvious that libertarian definitions of politics as 'the rule of one,


many, a few, or all over all' and of democracy as 'the rule of all over all' are 50

incompatible with the classical conceptions of both politics and democ-


racy. It is, however, characteristic of the distortion involved that when
libertarians attack democracy as a kind of 'rule' they usually confuse direct

185
TOWARDS AN INCLUSIVE DEMOCRACY

democracy with statist democracy. This is not surprising, in view of the


fact that it is obviously impossible to talk about a 'rule' in a form of social
organization where nobody is forced to be bound by laws and institutions,
in the formation of which s/he does not, directly, take part. 51

Therefore, the Greeks, having realized that 'there always is and there
always will be an explicit power, that is, unless a society were to succeed in
transforming its subjects into automata that had completely internalized
the instituted order', concluded that 'no citizen should be subjected to
52

power (μή άρχεσθαι) and if this was not possible that power should be
shared equally among citizens'. 53

Perhaps a useful way to examine the evolution of democracy in Athens


would be to relate it to a parallel effort to diminish the socio-economic
differences among the citizens, which can be considered as a step towards
economic democracy. I would argue that this limited form of economic
democracy played a significant role in enhancing the democratic institu­
tions. However, it was exactly the limited nature of economic democracy
which, in combination with the overall partial character of democracy,
eventually led to its collapse. In other words, as I will try to show here, the
decline of the Athenian democracy was not due, as is usually asserted by
critics of democracy, to the innate weaknesses of direct democracy, but to
its failure to become an inclusive democracy and in particular to the fact
that the political equality which the Athenian democracy had established
for its citizens was, in the last instance, founded on economic inequality. In
fact, the importance of economic inequities with respect to the stability of
democracy was recognized even at the time of the classical Athenian
democracy. According to Aristotle, for instance, 'some hold that property
. . . is always the pivot of revolutionary movements . . . the common
people are driven to rebellion by inequality in the distribution of
property'.54

Although a fuller discussion of economic democracy will have to wait


until the next chapter, a preliminary definition may be given here to
elucidate the Athenian conception of democracy. If we define political
democracy as the authority of the people (demos) in the political sphere —
a fact that implies political equality - then economic democracy could be
correspondingly defined as the authority of demos in the economic sphere
- a fact that implies economic equality. And, of course, we are talking
about the demos and not the state, because the existence of a state means the
separation of the citizen body from the political and economic process.
Economic democracy therefore relates to every social system that in­
stitutionalizes the integration of society and the economy. This means that,
ultimately, the demos controls the economic process, within an institu­
tional framework of demotic ownership of the means of production. In a

186
A NEW CONCEPTION OF DEMOCRACY

more narrow sense, economic democracy relates also to every social


system that institutionalizes the minimization of socio-economic differ-
ences, particularly those arising out of the unequal distribution of private
property and the consequent unequal distribution of income and wealth.
It is obvious that economic democracy refers both to the mode of
production and distribution of the social product and wealth. Let us
therefore see how production and distribution were organized in classical
Athens.
As regards, first, the mode of production, although the slaves made up
more than half of the population of Athens, many of them either worked
as independent craftsmen paying rent to their masters, or worked side by
side with the free farmers in the fields. Slavery, therefore, played a decisive
role in the production of economic surplus only as regards the production
that was under the control of the state (e.g. the mines at Laurion) and the
big landowners. The basis of the ancient Greek city, as Marx stresses, was
the small independent production of farmers and craftsmen, and not
slavery:
The pre-condition for the continued existence of the community is the
maintenance of equality among its free self-sustaining peasants, and their
individual labour as the condition of the continued existence of their
property.55

As regards the mode of distribution of the social product in ancient


Athens, it is generally acknowledged that it had played a decisive role in
56

the appropriation of the economic surplus. That is the reason why this
system is usually defined as 'appropriation by right of citizenship'. In other
words, the mechanisms through which the surplus (that usually took the
form of spoils, and tribute income from subservient states, but also income
from taxes imposed on the citizens themselves) was extracted and dis-
tributed were not economic, but basically political. The implication is that
the struggle between social groups took also a political form, mainly as a
conflict between the supporters of oligarchy (oligarchs) and the supporters
of democracy (democrats). The oligarchs, who were flanked by the big
landowners and rich merchants/craftsmen, as well as by the aristocrats,
were always in favour of limiting political rights (the right to vote and the
right to be elected), but also limiting public expenditure, which, in the last
instance, harmed more their own classes who were mainly responsible for
financing them. On the other hand, the democrats, who were made up
57

predominantly of the lower income strata (although their leaders did not,
as a rule, belong to these strata), demanded the broadening of political
rights, the increase of expenditure for public works, the payment of salaries
with regard to the exercise of civic rights, etc.

187
TOWARDS AN INCLUSIVE DEMOCRACY

Hence, the citizens' ability to partake of the state's profits and revenue
played a critical role in the distribution of economic surplus and therefore
the content of economic democracy itself (narrow sense). That is, the
more citizens were able to partake in the distributed economic surplus, the
greater the degree of economic democracy. And in fact there were several
ways in which citizens were taking part in the distribution of city money:
either in the form of compensation (misthos) for the exercise of their civic
rights (attending the Assembly, taking part in the People's Court as juror,
etc.), or in the form of 'social security' in case they were disabled with no
means of support, or, finally, in the form of payment for their services
58

with respect to public works. Furthermore, as I will try to show, the


process for completing political democracy among free citizens was
accompanied by a parallel process of the broadening of economic democ-
racy. The differentiating characteristic of the Athenian democracy at its
peak period, in relation to any other system in the ancient world and since
then, until today, was a collective conscious effort for the continuous
broadening and deepening of political democracy and, to a point, of
economic democracy. From this angle, the importance today of the
Athenian experience is not only that it shows the possibility, under certain
preconditions, for the organizing and functioning of present-day society
on the basis of the principles of direct democracy, which are the only ones
that may secure real democracy; its importance lies also in the fact that it
illustrates the incompatibility of political democracy and economic
oligarchy.
We could distinguish the following periods in the evolution of Athen-
ian political democracy in relation to the evolution of economic democ-
racy: first, the period prior to Solon; second, the period from Solon to the
reforms of Cleisthenes; third, the period from Cleisthenes to Pericles;
fourth, the period from Pericles till the end of the Peloponnesian War; and
finally, the period of decline of the Athenian democracy.
The period prior to Solon's archonship (594 BC) was characterized by a
significant concentration of economic and political power. The land
belonged to a few big landowners while the poor farmers who cultivated
it, called the 'Hectemoroi', were obliged to pay as rent one-sixth of their
produce. The relationship of the Hectemoroi was not simply the result of
economic pressures and debts, but expressed a traditional social status of
inferiority which came into existence during the Greek 'dark ages'
(1100—800 BC), when the weak and the poor offered their services to the
powerful in return for their protection. In particular, all those Hectemoroi
who could not pay their rent or, in general, all debtors who were not in a
position to pay their loans, lost, both they and their children, their very
freedom. Political power was still weak and real power rested with a few

188
A NEW CONCEPTION OF DEMOCRACY

influential families who controlled economic and military power. The few
political offices (nine archons, the Council of the Areopagos, etc.) be-
longed, according to one theory, to a hereditary ruling class, the noble-
men, while, according to another theory, some property criterion had
already been introduced prior to Solon. What is not, however, in dispute
is that the right to be elected to the higher offices was monopolized during
that period by the upper social and economic strata.
This condition of political and economic oligarchy, combined with
important economic changes in production and trade (intensification of
cultivation of land, expansion of exports, etc.), led to hard competition
between rich and poor, to which Solon was already referring in his poems
at the beginning of the sixth century. Solon's reforms, in particular the
Seisachtheia (the shaking off of burdens) that had preceded the reforms of
Cleisthenes, created the economic foundations for Isonomia (equality in
law) and direct democracy. It should be noted here that the Seisachtheia was
not simply a law abolishing debts, as is usually asserted. An alternative
explanation, based on the fact that Solon in his iamboi (poems) does not
refer to debts, is that the Seisachtheia abolished the relationship of the
economic dependence of the Hectemoroi, who then probably acquired full
rights of ownership of the land that they were cultivating. Equally
important steps in the limitation of economic power of the oligarchy were
the introduction of an extremely progressive income tax to cover emer-
gency needs (on top of the usual indirect taxes) and the shifting of the
burden of the expenses for the public duties (litourgies), as well as of a great
part of military expenses, on to the higher classes.59

These very important steps towards economic democracy were accom-


panied by corresponding political reforms. The Assembly of the People
(ecclesia), in which all citizens participated irrespective of income, acquired
the right to elect the leaders (archons) and the deputies (we are not dealing
here with the disputed historical fact as to whether Solon founded the
Council of 400 Deputies — Boule, as mentioned by Aristode) , as well as
60

the right to scrutinize the archons, a previously exclusive right of the


Council of the Areopagos. However, the higher offices of the city
61

remained in the hands of the elite since it is doubtful as to whether more


than one-fifteenth of the citizens belonged to the pentakosiomedimnoi (five
62

hundred bushel producers) and the noblemen, from whom the nine
archons were elected. Even the very right to vote was not universal, since
only those who belonged to some family group (genos) had this right and
many Athenians at that time did not belong to a genos.
After the fall of the Peisistratides' Tyranny (510 BC), which is viewed
today as the outcome of local rather than class conflicts, and the democrats'
takeover under Cleisthenes, just three years after the expulsion of the

189
TOWARDS AN INCLUSIVE DEMOCRACY

tyrants, the domination of the aristocrats was abolished in favour of a new


form of constitution, 'democracy' (507 BC). The main institutional chan-
ges introduced were the following:
• The differentiation of the citizens on the basis of the class criterion of
property size was abolished and was replaced by the criterion of the place
of residence.
• The right to vote was universalized and part of the judicial authority was
transferred to the people in the form of jury courts.
• The Council of Five Hundred was introduced, with important pre-
liminary jurisdiction which could influence the decisions of the ecclesia.
The particular democratic significance of this institution relates to the
way its members were elected. The election of its members by lot and
for only one year were necessary safety valves that prevented the
monopolizing of the office of deputy by professional politicians.
• Finally, the banning of leaders by vote (ostracism) was adopted. This was
another safety valve in the democratic process since, according to
Aristode, the aim of the new institution was to give the people the
power to neutralize 'those who were dominating or exerting undue
influence by virtue of their wealth or some other political strength'.63

Yet, the Athenian democracy was not completed with Cleisthenes. It


took another 20 to 30 years before election by lot was first introduced for
the archons (with the exception of the office of general which required
specialized knowledge and experience) — 487 BC — and for the property
criterion which excluded the lower strata from higher offices to be
abolished after the battle of Plataia in 479 BC. Finally, almost another 20
years had to pass for the Areopagos (whose members still belonged to the
two richer classes) to be deprived of its privileges, which were transferred
to the Assembly of the People, the Council of the Five Hundred, and the
jury courts (462 BC). By the end of this process, every adult male
64

Athenian citizen had the right to attend the ecclesia and if he was over 30
years he had the further right to be a magistrate (archon) or a legislator
(nomothetes) or a juror (dikastes). 63

The completion of Athenian democracy was associated with the era of


Pericles (461-429 BC) when both political and economic democracy
reached their peak. Political democracy came to its climax because it was
then that the process was completed which made the 'polis autonomous (it
set its own laws), self-judging (jury courts decided on every dispute) and
independent (the Assembly of the People made all important decisions) — the
three elements which, according to Thucydides, characterize a city as free.
Economic democracy also peaked at this time, because it was then that
compensation for the exercise of civic rights was established (judicial salary

190
A NEW CONCEPTION OF DEMOCRACY

for jury duty, assembly salary for participation in the ecclesia, salary for
deputies, soldiers, etc.). As a result of these payments 'no citizen was
prevented by poverty from exercising his political rights'. At the same
66

time, a huge programme for public works was started which not only
created the architectural masterpieces of Athens but also strengthened
significantly the income of the lower classes. It is therefore not accidental
that the greatest achievements of the ancient Greek civilization were
accomplished during the Periclean era.
This deepening of economic democracy, however, was not only the
outcome of the decisions of the Assembly of the People or the prompting
of Pericles. An external factor, the Persian Wars, played a decisive role.
The Persian Wars had a double economic effect. First, as Paparregopoulos
mentions, given that the privileged position of the higher classes depended
basically on land income which, because of the repeated destruction of
Attica, had almost disappeared, the effect was that 'the poor became on this
point similar to the wealthy, and with equality of services combined with
the (albeit temporary) equality of properties, it was very natural to bring
about, during these critical years, the equality of rights'. Second, the
67

formation of the Delian League and the consequent financial contributions


of the allies gave the Athenian public treasury the financial ability to
undertake the expenses for the upkeep of over 20,000 citizens, in the form
of compensation for political and military service rendered. 68

We should particularly stress here the importance of compensating


citizens for exercising their civic rights. The establishment of any demo-
cratic institution in the political sphere is self-cancelling when a large
number of its citizens are not in an objective economic position to spend
the necessary time required for an effective participation in the democratic
procedures. This is because time has always been a huge source of social
power. In the democratic Athens of Cleisthenes, in theory, everybody
could be elected to the highest offices, while in reality, the lower strata
were excluded. As Paparregopoulos notes, not even the method of
election by lot helped these strata because:
a great number of the poorer people were not drawn, being absent in naval
and commercial enterprises, and because the most important state offices, in
particular the military ones, were given, now as before, by ordination to the
most able, who naturally were not usually the poorer people. Nor did [the
poor] regularly attend the Assembly of the People and the courts of the
heliasts because they could not abandon, for this purpose, their income-
earning jobs.69

And of course it should not be forgotten that despite the significance of


participating in the Assembly of the People, the fact that the ecclesia

191
TOWARDS AN INCLUSIVE DEMOCRACY

assembled only 40 times a year meant that the office of, for example, a
councillor in the Council of 500 carried significant weight in the decision-
making process (although as Hansen points out, all the evidence points to
the fact that 'policy at Athens really was made by the Assembly rather than
by the Council (in the pre-Assembly stage)'). 70

As regards the importance of free time for the functioning of democ-


racy, slavery played a double role with respect to the reproduction of
democracy. It did play a positive role because (as Marxists assume) it
contributed significantly, though not decisively, to the creation of the
economic surplus that was necessary for the survival of society in general.
Furthermore, slavery, as well as the patriarchal relations in the household,
played a crucial role in allowing the male Athenians the time needed for
the exercise of their civic rights. However, slavery played also a very
significant negative role with respect to the reproduction of democracy. As
slave-ownership depended on the distribution of income and wealth, the
rich, who owned many more slaves than the poor, had much more time at
their disposal to exercise their civic rights. One therefore may argue that
the net effect of slavery on the reproduction of democracy was clearly
negative - a fact that was recognized by Pericles who introduced the
system of compensation for public servants, exacdy as a necessary counter-
balancing factor to the unequal distribution of free time.
In fact, the entire conflict between Pericles and Cimon (his conservative
political rival) had as its basis the preconditions for political democracy.
Cimon supported similar positions to the ones declared by the supporters
of today's liberal 'democracy'. Thus, for Cimon, the legislating of demo-
cratic procedures was sufficient and it was up to each citizen to use them
appropriately, through his abilities and work. On the contrary, Pericles
discerned the merely formal character of political rights when they are not
accompanied by social and economic rights. With the aim therefore of
diminishing the economic inequality among citizens, a precondition for
political equality, Pericles introduced the system of compensations. This,
however, necessitated an even greater limitation of citizenship (it was for
this reason that foreigners, in addition to women and slaves, were also
excluded from citizenship), and the expansion of tax revenues, through
what we now call the broadening of the tax base. The establishment of the
Athenian hegemony over other Greek cities played exactly this role.
However, the foundations of this democracy were not solid, as the
economic factors that supported Pericles' political democracy disappeared
quickly. Thus:
• the relative economic equality, brought about by the Persian Wars, was
completely temporary. The expansion of trade that had followed the

192
A NEW CONCEPTION OF DEMOCRACY

Persian Wars led to concentration of economic power and greater


inequality in the distribution of income and wealth. As Paparregopoulos
stresses:
the compensations by the public treasury were more or less sufficient to feed the
destitute, yet these people remained always destitute, whereas the richest of the
Athenians during these years increased their wealth significantly; so, a very
great inequality of wealth resulted, because of which the poorer, on many
occasions, became the blind instruments of the wealthier. 71

• the imposition of unequal political and economic relations by the


hegemonic Athens on her allies finally led to the Peloponnesian War
(431-404 BC) and the end of the Athenian hegemony, with obvious
72

consequences on the public treasury. With the end of the war and the
collapse of the Athenian hegemony, the basic financial source of the
economic democracy also dried up. Public revenue was no longer
enough, without significant cuts in military spending, to finance the two
main types of expenditure used by Pericles to support the income of the
poorer strata, namely, what we would today call Keynesian public works
and the payment of salaries, etc. The inevitable consequence was the
further weakening of the military strength of the city (the increasing use
of mercenaries contributed significantly to this process) that finally
brought about the end of democracy itself, after the Athenians were
defeated by Philip, Alexander the Great's father, in the battle of
Chaeronea (338 BC - although democracy was not formally abolished
until 332 BC). It is also noteworthy that Athens' decline was not checked
by the second Athenian naval hegemony, following the battle of
Mantineia (362 BC), despite (or, perhaps, because of) its more demo-
cratic character in relation to the first hegemony.

So, amidst increasing economic inequality domestically and growing


inability to impose any more external taxes to finance its internal democ-
racy, the material conditions on which economic democracy was based
were phased quickly away. At this stage, only the conversion of the partial
Athenian democracy into an inclusive one would have saved it; in other
words, the introduction of a complete political democracy that would
include all the city residents (free citizens, women, slaves) and a real
economic democracy that would have abolished economic inequalities.
Such a democracy would not have depended for its financial support on
a surplus created through inequality (domestic and external) as before, but
on an expanded domestic surplus. One might speculate that the very
elimination of economic inequalities in general and of slavery in particular
should have had a significant effect in expanding the domestic surplus. In
general, one may expect that productivity of slaves, who constituted more

193
TOWARDS AN INCLUSIVE DEMOCRACY

than half the labour force, would have vastly improved had they been
offered full citizenship rights. Furthermore, slavery had an alienating effect
not just on slaves but also on their masters, with corresponding adverse
effects on their productivity. Thus, historians agree that in the late stages of
the Athenian democracy economic inequality and slavery had become the
material bases for the conversion of productive Athenian citizens into
parasitical 'civil servants'. So, whereas the intended function of public
73

compensation was to decrease inequality in the distribution of free time (a


basic symptom of economic inequality), it finally ended up undermining
productive activity itself: financially weaker citizens were converted into
public employees who were paid from the surplus produced by the
subordinate cities and the slaves. A similar positive effect on the domestic
surplus would have been created by the full integration of women into the
citizen body.
The final failure, therefore, of Athenian democracy was not due, as is
usually asserted by its critics, to the innate contradictions of democracy
itself but, on the contrary, to the fact that the Athenian democracy never
matured to become an inclusive democracy. This cannot be adequately
explained by simply referring to the immature 'objective' conditions, the
low development of productive forces and so on — important as these may
be — because the same objective conditions prevailed at that time in many
other places all over the Mediterranean, not only the rest of Greece, but
democracy flourished mainly in Athens. Conversely, the much lower
development of productive forces did not prevent higher forms of eco-
nomic democracy (narrow sense) than in Athens to develop among
aboriginal American communities where economic resources were avail-
able to everyone in the community for use, and 'things were available to
individuals and families of a community because they were needed, not
because they were owned or created by the labour of a possessor'. 74

The liberal conception of democracy


The liberal conception of democracy is based on the negative conception
of freedom and a corresponding conception of human rights. From these
definitions and a world view which sees human nature as atomistic and
human beings as rational agents whose existence and interests are onto-
logically prior to society follow a number of principles about the constitu-
tion of society, i.e. political egalitarianism, freedom of citizens — as
competitors - to realize their capabilities at the economic level and
separation of the private realm of freedom from the public realm.
It is therefore clear that the above liberal principles about the constitu-
tion of society imply a form of democracy where the state is separate from
the economy and the market. In fact, liberal philosophers not only took for

194
A NEW CONCEPTION OF DEMOCRACY

granted the separation of the state apparatus from society but saw democ-
racy as a way of bridging the gap between state and society. The bridging
role was supposed to be played by representative 'democracy', a system
whereby the plurality of political parties would provide an adequate forum
for competing interests and systems of values. No wonder therefore that
none of the founders of classical liberalism was an advocate of democracy,
in the sense of direct democracy, let alone inclusive democracy. In fact, the
opposite was the case. For instance, the American Founding Fathers
Madison and Jefferson were sceptical of democracy, precisely because of its
Greek connotation of direct rule. This is why they preferred to call the
American system republican, because 'the term was thought to be more
appropriate to the balanced constitution that had been adopted in 1787
than the term democratic, with its connotations of lower-class
dominance'. 75

However, in representative democracy, as Hannah Arendt stressed, the


age-old distinction between ruler and ruled asserts itself again: 'Once
more, the people are not admitted to the public realm, once more the
business of government becomes the privilege of the few . . . the result is
that the people must either sink into lethargy, the forerunner of death to
the public liberty, or preserve the spirit of resistance to whatever govern-
ment they have elected, since the only power they retain is the "reserve
power of revolution".' 76

In this light, one may be led to a different understanding of the motives


behind the liberal adoption of representative 'democracy'. Thus, instead of
considering representative democracy as a bridge between state and society
we may see it as a form of statist democracy, whose main aim is the
exclusion of the vast majority of the population from political power. As
John Dunn stresses:
It is important to recognize that the modern state was constructed, painstak-
ingly and purposefully, above all by Jean Bodin and Thomas Hobbes, for
the express purpose of denying that any given population, any people, had
either the capacity or the right to act together for themselves, either indepen-
dently of, or against their sovereign. The central point of the concept was to
deny the very possibility that any demos (let alone one on the demographic
scale of a European territorial monarchy) could be a genuine political agent,
could act at all, let alone act with sufficiently continuous identity and
practical coherence for it to be able to rule itself. . . the idea of the modern state
was invented precisely to repudiate the possible coherence of democratic claims
to rule, or even take genuinely political action . . . representative democracy is
democracy made safe for the modern state. 71

It is not therefore surprising that Adam Smith, the father of economic

195
TOWARDS AN INCLUSIVE DEMOCRACY

liberalism, took pains to stress that the main task of government was the
defence of the rich against the poor - a task that, as John Dunn points out,
is 'necessarily less dependably performed where it is the poor who choose
who is to govern, let alone where the poor themselves, as in Athens, in
large measure simply are the government'. 78

In conclusion, the liberal conception of democracy, which, when


implemented, inevitably leads to the concentration of political power in
the hands of a political elite and the situation of political oligarchy and
inequality, is also compatible with the concentration of economic power
in the hands of an economic elite and the state of economic oligarchy and
inequality that the market economy creates. Furthermore, both political
and economic oligarchy are perfectly compatible with the liberal concep-
tion of freedom.

The Marxist-Leninist conception of democracy


The starting point in the socialist conception of democracy is a critique of
the liberal conception of democracy. The critique is based on the fact that
the liberal conception takes for granted the separation of the political from
the economic realm and therefore, in effect, protects and legitimizes the
huge inequalities to which the market economy inevitably leads. In other
words, the liberal democracy, even if it is supposed to secure an equal
distribution of political power (which as we saw above it certainly does
not) it still bypasses the crucial issue of distribution of economic power.
The question therefore arises of economic democracy, i.e. of an institu-
tional arrangement which would secure, for every citizen, an equal say in
economic decision-making.
The answer traditionally given to this question by socialists can be
classified, broadly speaking, in terms of the social-democratic and the
Marxist-Leninist conceptions of democracy. The social-democratic con-
ception is essentially a version of the liberal conception. In other words,
social democracy consists of a 'liberal democracy' element, in the sense of
a statist and representative form of democracy based on a market economy,
and an 'economic democracy' element, in the sense of a strong welfare
state and the state commitment to implement full employment policies.
However, as we saw in Chapter 2, the social-democratic conception of
democracy has been abandoned by social-democratic parties all over the
world which have dropped the 'economic democracy' element of their
conception of democracy. As a result, the social-democratic conception of
democracy is by now virtually indistinguishable from the liberal one, in the
context of what I call the present 'neoliberal consensus'.
Therefore, setting aside the traditional social-democratic conception
(modern versions of 'radical' democracy will be discussed in the next

196
A NEW CONCEPTION OF DEMOCRACY

section) let us examine the Marxist—Leninist conception which is still


relevant to the remnants of the Marxist Left. My argument is that,
appearances to the contrary notwithstanding, this conception is clearly a
statist conception of democracy. In this conception, democracy is not
differentiated from the state for the entire historical period which separates
capitalism from communism, i.e. for the entire period that is called the
'realm of necessity', when scarcity leads to class antagonisms which make
inevitable class dictatorships of one kind or another. In this view, socialism
will simply replace the dictatorship of one class, the bourgeoisie, by that of
another, the proletariat. Thus, for Marx:
Between capitalist and communist society lies the period of the revolutionary
transformation of the one into another. Corresponding to this is also a
political transition period in which the state can be nothing but the revolu-
tionary dictatorship of the proletariat. 79

Also, according to Lenin, 'Democracy is also a state and consequendy


democracy will also disappear when the state disappears. Revolution alone
can "abolish" the bourgeois state. The state in general, i.e. the most
complete democracy can only "wither away".' And he continues that
80

the state (and democracy) will wither away only when:


people have become so accustomed to observing the fundamental rules of social
intercourse and when their labour becomes so productive that they will
voluntarily work according to their ability . . . there will then be no need for
society to regulate the quantity of products to be received by each; each will
take freely according to his needs . . . from the moment all members of
81

society, or even only the vast majority have learned to administer the state
themselves . . . the need for government of any kind begins to disappear
altogether . . . for when all have learned to administer and actually do
independently administer social production, independently keep accounts and
exercise control over the idlers, etc . . . the necessity of observing the simple
fundamental rules of human intercourse will very soon become a habit. 82

It is therefore obvious that in this world view, a non-statist conception


of democracy is inconceivable, both at the transitional stage leading to
communism and at the higher phase of communist society: in the former,
because the realm of necessity makes necessary a statist form of democracy
where political and economic power is not shared among all citizens but
only among members of the proletariat; in the latter, because when we
reach the realm of freedom, no form of democracy at all is necessary, since
no significant decisions will have to be made! Thus, at the economic level,
scarcity and the division of labour will by then have disappeared, and
therefore there will be no need for any significant economic decisions to

197
TOWARDS AN INCLUSIVE DEMOCRACY

be taken about the allocation of resources. Also, at the political level, the
administration of things will have replaced the administration of people,
and therefore there will be no need for any significant political decisions to
be taken either.
However, the Marxist abolition of scarcity depends on an objective
definition of 'needs', which is neither feasible, nor — from the democratic
point of view — desirable. It is not feasible because, even if basic needs may
be assumed finite and independent of time and place, the same cannot be
said about their satisfiers (i.e. the form or the means by which these needs
are satisfied), let alone non-basic needs. It is not desirable because, in a
democratic society, an essential element of freedom is choice as regards the
ways in which needs are formed and satisfied. As Bookchin who, in
contrast to Marx, adopts a subjective definition of needs and post-scarcity,
points out:

[I]n a truly free society needs would be formed by consciousness and by


choice, not simply by environment and tool-kits . . . the problems of needs
and scarcity, in short, must be seen as a problem of selectivity — of choice . . .
freedom from scarcity, or post-scarcity presupposes that individuals have
the material possibility of choosing what they need — not only a sufficiency of
available goods from which to choose but a transformation of work, both
qualitatively and quantitatively. 83

So, the communist stage of post-scarcity is in fact a mythical state of


affairs - if needs and scarcity are defined objectively — and reference to it
could simply be used (and has been used) to justify the indefinite main-
tenance of state power and power relations and structures in general. It is
therefore obvious that, within the problematic of the democracy project,
the link between post-scarcity and freedom should be broken. The
abolition of scarcity and, consequently, of the division of labour is neither
a necessary nor a sufficient condition for democracy. Therefore, the ascent
of man from the kingdom of necessity to the kingdom of freedom should
be de-linked from the economic process. Still, from Aristotle, through
Locke and Marx, to Arendt, the distinction between the 'realm of
necessity' (where nature belongs) and the 'realm of freedom' always has
been considered to be fundamental. However, although this distinction
may be useful as a conceptual tool in classifying human activities, there is no
reason why the two realms must be seen as mutually exclusive in social
reality. Historically, there have been several occasions when various
degrees of freedom survived under conditions that could be characterized
as belonging to the 'realm of necessity'. Furthermore, once we cease
treating the two realms as mutually exclusive, there is no justification for

198
A NEW CONCEPTION OF DEMOCRACY

any attempt to dominate Nature — an important element of Marxist


growth ideology - in order to enter the realm of freedom.
In conclusion, there are no material preconditions of freedom. The
entrance to the realm of freedom does not depend on any 'objective'
factors, like the arrival of the mythical state of affairs of material abundance.
The level of development of productive forces that is required so that
material abundance for the entire population on earth can be achieved
makes it at least doubtful that such a stage could ever be achieved without
serious repercussions to the environment — unless, of course, 'material
abundance' is defined democratically (and not 'objectively') in a way
which is consistent with ecological balance. By the same token, the
entrance to the realm of freedom does not depend on a massive change of
consciousness through the adoption of some form of spiritualistic dogma,
as some deep ecologists and other spiritualistic movements propose.
Therefore, neither capitalism and socialism, on the 'objective' side, nor the
adoption of some kind of spiritualistic dogma, on the 'subjective' side,
constitute historical preconditions to enter the realm of freedom.

The conceptions of 'radical' democracy


In the last ten years or so, and particularly after the collapse of 'actually
existing socialism', several versions of what is usually termed 'radical'
democracy have flourished among state socialists (post-Marxists, neo-
Marxists, ex-Marxists et al). The common characteristic of all these
approaches to 'radical' democracy is that they all take for granted the
present institutional framework, as defined by the market economy and
liberal democracy, and suggest various combinations of the market with
forms of social ownership of the means of production, as well as the
'democratization' of the state.
Thus, the present ideological hegemony of liberalism has led to a
situation where many 'socialists' identify socialism with an extension of
(liberal representative) democracy rather than with the emancipation of
the working class and concentrate their efforts in theorizing, in several
84

ways, that socialism is the fulfilment of liberalism rather than its negation.
A typical example of this trend is Norberto Bobbio, who, adopting the
negative definition of freedom as 'freedom from', characterizes liberal
democracy as 'the only possible form of an effective democracy' capable of
protecting the citizens from state encroachment. In the process, Bobbio
85

attacks what he calls the 'fetish' of direct democracy on the usual grounds
of scale (ignoring the proposals of confederalists) and the experience of the
student movement (ignoring the fact that democracy is not just a pro-
cedure but a form of social organization). In essence, therefore, what
Bobbio, as well as Miliband and other writers in the same ideological
86

199
TOWARDS AN INCLUSIVE DEMOCRACY

space promote, is a form of economic democracy to complement liberal


democracy. In so doing, in effect, they try to take over the social-
democratic space, which was abandoned by social democrats, after the
latter moved to the right and joined the neoliberal consensus.
At the same time, the Habermasian school promotes lately a 'procedur-
alist' model of democracy, as a third way between the liberal model and 'a
communitarian interpretation of the republican model'. Thus, Habermas,
differentiating his model of democracy from what he calls the 'state-
centred understanding of politics' that, according to him, both the liberal
and the republican models of democracy represent, stresses that, according
to discourse theory, the success of deliberative politics depends 'not on a
collectively acting citizenry but on the institutionalization of the corres-
ponding procedures and conditions of communication'. His model con-
sists of a 'decentred society', that is, a 'democracy' which is based on a civil
society that 'provides the social basis of autonomous public spheres that
remain as distinct from the economic system as from the administra-
tion'.87

However, the Habermasian view of democracy not only converts


democracy into a set of procedures instead of a regime, as Castoriadis 88

rightly points out, but it is also utterly irrelevant to the present trends of the
market economy and the bureaucratization of today's 'polities'. Thus,
Habermas ignores the fact that the present internationalized market econ-
omy can easily marginalize any groups that are 'autonomous' from the
market public spheres (co-ops etc.) — unless their creation is part of a
comprehensive political programme aiming at a new form of society.
Equally ignored by him is the fact that, even at the political level, the
possibility of public spheres autonomous from the state is effectively
undermined by the marketization process (deregulation of markets, etc.),
which enhances not the 'civil society' but, instead, the elites in effective
control of the means of production (see, for instance, the present withering
away of the trade union movement, the decline of local authorities' power,
etc.).
Similar arguments can be advanced against the various versions of 'red-
green' democracy proposed by the Marxist ecological left. One could
mention here the views expressed by James O'Connor, who talks about
'sublating' local and central, spontaneity and planning, exclusive and
inclusive cultural identities, industrial and social labour, etc.; or, alterna-
89

tively, John Dryzek, who stresses the need for 'democratization at all
possible levels: in the autonomous public spheres, such as those constituted
by new social movements, at the boundaries of the state, where legitimacy
is sought through discursive exercises, and even within the state, e.g. in the
form of impact assessment'. 90

200
A NEW CONCEPTION OF DEMOCRACY

Others talk about a process of democracy rather than a set of procedures.


Thus, Chantal Mouffe's version of 'radical' democracy is differentiated
from that of the Habermasians by postulating that a final realization of
democracy is impossible, as a result of 'the unresolvable tension between
the principles of equality and liberty'. The author sees 'radical' democ-
91

racy as the only alternative today and explicitly states that 'Such a
perspective does not imply the rejection of liberal democracy and its
replacement by a completely new political form of society, as the tradi-
tional idea of revolution entailed, but a radicalization of the modem
democratic tradition.' Furthermore, to the possible objection that a
92

strategy of democratization of the state is severely constrained by the


market economy Mouffe's answer is that 'political and economic liberal-
ism need to be distinguished and then separated from each other'. 93

Mouffe's view of 'radical' democracy can perhaps be best summarized in


the following excerpt:
The distinction between private (individual liberty)/public (respublica) is
maintained as well as the distinction individual/citizen, but they do not
correspond to discrete separate spheres . . . those two identities exist in a
permanent tension that can never be reconciled. But this is precisely the
tension between liberty and equality that characterizes modern democracy. It
is the very life of such a regime and any attempt to bring about a perfect
harmony, to realize a 'true' democracy can only lead to its destruction. This
is why a project of radical and plural democracy recognizes the impossibility
of the complete realization of democracy and the final achievement of the
political community. Its aim is to use the symbolk resources of the liberal
democratic tradition to struggle for the deepening of the democratic revolution
knowing that it is a never ending process. 94

It is obvious that Mouffe's 'radical' democracy is another attempt to


reconcile the autonomy of the individual with liberalism. Thus, Mouffe,
not unlike L. Susan Brown (who, as we saw earlier, separates existential
from instrumental liberalism) separates political from economic liberalism.
But the fact that political and economic liberalism have always been
inseparable is not a historical accident. The marketization of the economy,
i.e. the lifting of social controls on the market in the last two centuries, has
always been based on the ideal of a 'free' (from state controls and
restrictions) individual. So, Mouffe's version of 'radical' democracy is
grounded on a negative conception of freedom and an individualistic
conception of autonomy, which is assumed separate from collective
autonomy. Furthermore, the author, by mixing up the fact that democracy
is indeed a process (in the sense that divisions among citizens will always
exist and will continue necessitating a deepening of any institutionalized

201
TOWARDS AN INCLUSIVE DEMOCRACY

democracy) with the meaning of democracy itself, ends up by defining


radical democracy in terms of 'extending and deepening' the present
'liberal oligarchy' (which is christened democracy) rather than in terms of
the institutional preconditions of democracy. Finally, the author, starting
from the premise that the identities of citizen and individual can never be
reconciled, since they correspond to the tension between liberty and
equality, derives the conclusion that the project for democracy will never
be completed. So, the fact that this tension is the inevitable outcome of the
unequal distribution of political, economic and social power is ignored.
Consequendy, there is no scope in this problematic for an alternative
definition of an inclusive democracy that could create the necessary (but
not the sufficient) conditions for eliminating the tension between equality
and liberty.
A more radical version of democracy is David Miller's 'deliberative
democracy' which, as far as its economic aspects are concerned, is a form
95

of market socialism, i.e. a combination of social ownership of the means


96

of production with a market economy. As the author describes the model


'the key idea is that the market mechanism is retained as a means of
providing most goods and services, while the ownership of capital is
socialized'. This model at the micro-economic level assumes that all
97

decisions about what and how to produce are taken by productive


enterprises which take the form of workers' co-operatives (a truly radical
characteristic with respect to the other forms of 'radical' democracy) and
which compete for custom in the market. At the macro-economic level,
apart from the socialization of capital, it is assumed that a sort of distributive
policy is in place which ensures that every citizen has adequate means to
satisfy his/her basic needs. Finally, democracy at the workplace is secured
98

since each enterprise is democratically controlled by those who work for it


who also decide how to distribute the co-op's income.
It is obvious that this model of market socialism is as a-historical as the
civil societarian approach since it presupposes a degree of statism which is
no longer possible in the present internationalized market economy, as I
tried to show in the first two chapters. Christopher Pierson is therefore
right when in criticizing this model and similar models of market socialism
he points out that:
We must, I think, assume that any form of market society which is to be
consistent with the aspirations of the market socialists will require a strong and
interventionist state, indeed a state whose interventions would almost
certainly be more extensive than those that we find in existing welfare states
. . . there is an irony here. The market socialist model is very much one for
'socialism in one nation-state'. Yet, interest in market socialism was largely

202
A NEW CONCEPTION OF DEMOCRACY

fuelled by the seeming impossibility of pursuing a national-based socialist or


social democratic strategy (largely because of the disabling effect of inter-
national markets). 99

However, apart from this criticism of feasibility, one may hardly


characterize the form of political and economic organization proposed by
this model as democracy. At most, it proposes a form of workplace
democracy. Thus, the form of democracy suggested is not a political
democracy since it is based on representative democracy. Also, the
democracy proposed cannot be characterized as economic democracy
since it assumes that the allocation of productive resources will be deter-
mined not by citizens' assemblies but by competing co-ops. It is therefore
clear that in such a model citizens will have no extra say in the process of
allocation of resources, apart from that they will acquire those of them that
are co-op members. But, this is bound to be a partial and fragmented say,
referring only to the activity of the enterprise to which each citizen
belongs and with all that this arrangement may imply in terms of un-
employment and job security — unless, again, this is avoided through
extensive state intervention in a closed economy. In a nutshell, the model
of deliberative democracy (as well as similar models of market socialism)
suffers from the basic drawback of much of current 'socialist' thought, i.e.
that it assumes that it is only capitalist markets which are incompatible with
democracy and not the entire system of the market economy, as we have
defined it in this book.
Another version of 'radical' democracy, which criticizes models of
market socialism like the above model of deliberative democracy for the
fact that they concentrate on enterprises at the exclusion of other im-
portant parts of the civil society, is the model of 'associational' or 'associa-
tive' democracy. However, associational democracy does not aim at a
100

radical transformation of society as market socialism does. Its aim is much


more modest: to act 'as a supplement to and a healthy competitor for the
currently dominant forms of social organization: representative mass
democracy, bureaucratic state welfare and the big corporation'. But, 101

despite the fact that associational democracy takes for granted the entire
present institutional framework and expresses no intention to replace it, it
does not hesitate to present itself as 'a third way' between the market
economy and statist socialism! 102

As Hirst stresses, associationalism differs from some versions of the civil


societarian approach because it treats the self-governing voluntary bodies
not as 'secondary associations' but as the primary means of organizing
social life in a society where the state 'becomes a secondary (if vitally
necessary) public power that ensures peace between associations, protects

203
TOWARDS AN INCLUSIVE DEMOCRACY

the rights of individuals and provides the mechanisms of public finance


whereby a substantial part of the activities of associations are funded'. 103

Thus, associational democracy, acknowledging the importance of concen-


tration of economic power with respect to the concentration of social
power, proposes a high degree of decentralization. In fact, associationalism
is supposed to provide a rationale for the decentralization of acirrunistration
and a practical means of accomplishing it. The objective therefore is 'to
restore the scope of civil society by converting both companies and state
welfare service agencies into self-governing associations. This will be a
long haul and in the interim the most realistic policies are those which
boost the co-operative economy and the voluntary sector in welfare'. 104

However, the meaning assigned to 'co-operative economy' by associa-


tional democracy is not workers' co-ops which, together with guild
socialism, are dismissed as both undesirable and obsolete in a world of
international competition. What is suggested instead is strengthening
105

the small and medium sized firms by providing them with a supportive
regional and local institutional context and regulating the economy by
regional or local collaborative and public institutions. At the same time,
associational democracy proposes the replacement of the present 'share-
holders' economy' with a 'stakeholders' one. Thus, the governance of
enterprises is proposed to be assigned to representatives of a tripartite
relationship of stakeholders (workers, capitalists and local community)
rather than to representatives of shareholders as at present - an arrange-
ment that will help in making firms accountable to its members and society
at large.
To the obvious questions of who is going to initiate these reforms and
why, the answer given by this model is twofold. As regards 'who', it is
suggested that 'private initiatives must go hand-in-hand with — indeed may
depend on — public reforms. Legal and institutional changes would be
necessary to facilitate the rapid growth of associational governance.' It is
106

therefore obvious that the state is given, again, a much more important
economic role than the one that it is allowed to play at present within the
framework of the internationalized market economy.
As regards 'why', there is a 'moral' and an 'economic' answer. The
moral answer is that 'human welfare and liberty are both best served when
as many of the affairs of society as possible are managed by voluntary and
democratically self-governing associations'. The economic answer is
107

that 'those societies that have fared best have managed to balance co-
operation and competition' (Germany, Japan) whereas the countries that
adopt the Anglo-Saxon model (UK, USA) 'have failed to develop or
sustain these quasi-collectivist and corporatist forms of social solidarity'. 108

All this, at the very moment when the 'Rhineland' model is now in a state

204
A NEW CONCEPTION OF DEMOCRACY

of decline, exactly because of the characteristics admired by associational-


ists, i.e. the more extensive social controls on the markets that it involves,
make it less competitive than the Anglo-Saxon model!
Another version of 'radical' democracy, which might also be taken as
an attempt to internationalize the hopelessly 'closed' civil societarian
approach we examined earlier, is what is called the 'cosmopolitan model of
democracy' proposed by David Held. Thus, the author, after explicitly
109

adopting the separation of society from the economy and the state, in other
words, the system of the market economy and liberal democracy, proposes
a process of 'double democratization': the interdependent transformation
of both state and civil society. As I have already discussed the feasibility and
desirability of the content of 'double democratization' when I examined
the civil societarian approach, I will restrict the discussion here to the
'cosmopolitan' aspects of the model and in particular to the issue of
whether this conception of democracy is more realistic than the usual
versions of the civil societarian approach.
The basic premise of the 'cosmopolitan model' is that in today's
internationalized market economy democracy has to become a 'trans-
national affair'. This implies that a number of institutional requirements
have to be met so that the possibility of democracy can be linked to an
expanding framework of democratic institutions and agencies. Such re-
quirements mentioned by Held are: the creation of regional parliaments
(an enhanced European Parliament is the model), the institution of general
referenda cutting across nation-states, the opening of international
governmental organizations to public scrutiny, the entrenchment of a
cluster of rights (political, economic, social) and a re-formed UN which
'would seek unreservedly to place principles of democratic representation
above those of superpower politics'. The author proposes also various
110

methods which may be used to restrict 'the activities of powerful transna-


tional interest groups to pursue their interests unchecked' and the model
111

is completed with the usual array of privately and co-operatively owned


enterprises so that 'the modus operandi of the production, distribution and
the exploitation of resources must be compatible with the democratic
process and a common framework of action'. 112

As becomes obvious from the above listing of the institutional require-


ments of the 'cosmopolitan model', some of them are 'painless' for the
ruling political and economic elites and may emerge anyway as a result of
the present development of economic blocs (regional parliaments, regional
referenda, greater openness). Other arrangements fall into the area of
science fiction (who is going to force the superpowers to abdicate their
privileges in a re-formed UN?) Finally, between these two extremes there
205
TOWARDS AN INCLUSIVE DEMOCRACY

is a grey area of proposed arrangements (controls on activities of multi-


nationals, entrenchment of a cluster of economic and social rights) whose
feasibility depends on the content assigned to them - which is left vague by
the author. If the content given to these arrangements comes in conflict
with the requirements of the internationalized market economy (e.g. the
entrenchment of each citizen's right to a job and of a corresponding firm
commitment by governments, or the adoption of strict restrictions on
multinationals' activities on the basis of ecological criteria) then we move
again to the area of science fiction and everything said above could be
repeated here. If, on the other hand, the content given to these arrange-
ments does not affect the logic and the dynamic of the internationalized
market economy, i.e. if they are painless to the ruling elites, then they are
feasible but have little to do with the aspirations of the civil societarians to
impose effective social controls on the markets.

The conception of an inclusive democracy


A fruitful way, perhaps, to begin the discussion on a new conception of
democracy may be to distinguish between the two main societal realms,
the public and the private, to which we may add an 'ecological realm',
defined as the sphere of the relations between the natural and the social
worlds. The public realm in this book, contrary to the practice of many
supporters of the republican or democratic project (Arendt, Castoriadis,
Bookchin et al.), includes not just the political realm, but also the
economic realm as well as a 'social' realm; in other words, any area of
human activity where decisions can be taken collectively and democrat-
ically. The political realm is defined as the sphere of political decision-
taking, the area where political power is exercised. The economic realm is
defined as the sphere of economic decision-taking, the area where eco-
nomic power is exercised with respect to the broad economic choices that
any scarcity society has to make. Finally, the social realm is defined as the
sphere of decision-taking in the workplace, the education place and any
other economic or cultural institution which is a constituent element of a
democratic society.
To my mind, the extension of the traditional public realm to include the
economic, ecological and 'social' realms is an indispensable element of an
inclusive democracy. We may therefore distinguish between four main
types of democracy that constitute the fundamental elements of an in-
clusive democracy: political, economic, ecological and 'democracy in the
social realm'. Political, economic and democracy in the social realm may
be defined, briefly, as the institutional framework that aims at the equal
distribution of political, economic and social power respectively; in other
words, as the system which aims at the effective elimination of the

206
A NEW CONCEPTION OF DEMOCRACY

domination of human being over human being. Correspondingly, we may


define ecological democracy as the institutional framework that aims at the
elimination of any human attempt to dominate the natural world; in other
words, as the system which aims to reintegrate humans and nature.

Political democracy
We may distinguish various forms of political power-sharing in history,
which, schematically, may be classified as either democratic or oligarchic.
In the former, political power is shared equally among all those with full
citizen rights (typical example is the Athenian ecclesia), whereas in the latter
political power is concentrated, in various degrees, in the hands of
miscellaneous elites.
In the political realm there can only be one form of democracy, what we
may call political or direct democracy, where political power is shared equally
among all citizens. So, political democracy is founded on the equal sharing
of political power among all citizens, the self-instituting of society. This
means that the following conditions have to be satisfied for a society to be
characterized as a political democracy:
1. That democracy is grounded on the conscious choice of its citizens for
individual and collective autonomy and not on any divine or mystical
dogmas and preconceptions, or any closed theoretical systems involv-
ing social/natural 'laws', or tendencies determining social change.
2. That there are no institutionalized political processes of an oligarchic
nature. This implies that all political decisions (including those relat-
ing to the formation and execution of laws) are taken by the citizen
body collectively and without representation.
3. That there are no institutionalized political structures embodying
unequal power relations. This means, for instance, that where dele-
gation of authority takes place to segments of the citizen body, in
order to carry out specific duties (e.g. to serve as members of popular
courts, or of regional and confederal councils, etc.), the delegation is
assigned, on principle, by lot, on a rotation basis, and it is always
recallable by the citizen body. Furthermore, as regards delegates to
regional and confederal bodies, the mandates should be specific. This
is an effective step towards the abolition of hierarchical relations, since
such relations today are based, to a significant extent, on the myth of
the 'experts' who are supposed to be able to control everything, from
nature to society. However, apart from the fact that the knowledge of
the so-called experts is doubtful (at least as far as social, economic and
political phenomena is concerned), in a democratic society, political
decisions are not left to the experts but to the users, the citizen body.

207
TOWARDS AN INCLUSIVE DEMOCRACY

This principle was consistently applied by the Athenians for whom 'all
citizens were to take part, if they wished, in running the state, but all
were to be amateurs . . . professionalism and democracy were re-
garded as, at bottom, contradictory'. 113

4. That all residents of a particular geographical area (which today — for


reasons I will explain in the next chapter — can only take the form of
a geographical community), beyond a certain age of maturity (to be
defined by the citizen body itself) and irrespective of gender, race,
ethnic or cultural identity, are members of the citizen body and are
directly involved in the decision-taking process.

The above conditions are obviously not met by parliamentary 'democ-


racy' (as it functions in the West), soviet 'democracy' (as it functioned in
the East) or the various fundamentalist or semi-military regimes in the
South. All these regimes are therefore forms of political oligarchy, where
political power is concentrated in the hands of various elites (professional
politicians, party bureaucrats, priests, military and so on). Similarly, in the
past, various forms of oligarchies dominated the political domain, when
emperors, kings and their courts, with or without the co-operation of
knights, priests and others, concentrated political power in their hands.
On the other hand, several attempts were made in the past to institu-
tionalize various forms of direct democracy, especially during revolu-
tionary periods (for example, the Parisian sections of the early 1790s, the
Spanish assemblies in the civil war, etc.). However, most of these attempts
were short-lived and usually did not involve the institutionalization of
democracy as a new form of political regime that replaces, and not just
complements, the state. In other cases, democratic arrangements were
introduced as a set of procedures for local decision-making. Perhaps the
only real parallel to the Athenian democracy, as Hansen notes, were four
Swiss cantons and four half cantons which were governed by assemblies of
the people (Landsgemeinden) and, in their day, were sovereign states. 114

So, the only historical example of an institutionalized direct democracy


where, for almost two centuries (508/7 BC to 322/1 BC), the state was
subsumed in the democratic form of social organization, was the Athenian
democracy. Of course, the Athenian democracy, as we saw above, was a
partial political democracy. But, what characterized the Athenian demo-
cracy as partial was not the political institutions themselves but the very
narrow definition of full citizenship adopted by the Athenians — a defini-
tion which excluded large sections of the population (women, slaves,
immigrants) who, in fact, constituted the vast majority of the people living
in Athens.
Furthermore, I refer to 'institutionalized' direct democracy in order to

208
A NEW CONCEPTION OF DEMOCRACY

make clear the distinction between democratic institutions and democratic


practice. The latter, as critics of democracy have pointed out, could
sometimes be characterized as de facto 'oligarchic', in the sense that the
decision-taking process was often effectively controlled by a strong leader
(e.g. Pericles), or a small number of demagogues. However, this could
hardly be taken as a serious criticism of the democratic institutions
themselves. In fact, as it was argued above, it was precisely the partial
character of the Athenian political democracy which, combined with the
prevailing significant disparities in the distribution of economic power,
not only created serious contradictions in the democratic process but also,
at the end, by weakening the economic base on which this process was
built, led to the collapse of the democratic institutions themselves.
It is therefore clear that the institutionalization of direct democracy is
only the necessary condition for the establishment of democracy. As
Castoriadis puts it: 'The existence of a public space (i.e. of a political
domain which belongs to all) is not just a matter of legal provisions
guaranteeing rights of free speech, etc. Such conditions are but conditions
for a public space to exist'. Citizens in Athens, for instance, before and
115

after deliberating in the assemblies, talked to each other in the agora about
politics. Similarly, a crucial role in the education of citizens is played by
116

paedeia. Paedeia is not just education but character development and a well-
rounded education in knowledge and skills, i.e. the education of the
individual as citizen, which can only 'give valuable, substantive content to
the "public space" '. As Hansen points out on the crucial role of
117

paedeia:
[T]o the Greek way of thinking, it was the political institutions that shaped
the 'democratic man' and the 'democratic life', not vice versa: the institutions
of the polis educated and moulded the lives of the citizens, and to have the
best life you must have the best institutions and a system of education
conforming with the institutions. 118

Economic democracy
Historically, in contrast to the institutionalization of political democracy,
there has never been a corresponding example of an institutionalized
economic democracy. Most economic decisions, in historical societies,
until the rise of the market economy, were taken at the micro-level,
namely, at the individual production unit, although society used to
exercise in various ways its power on markets, where part of economic
activity had to go through, as we saw in Chapter 1. In most of these
societies economic power was unequally shared, in accordance with the
established patterns of unequal distribution of income and wealth. But,

209
TOWARDS AN INCLUSIVE DEMOCRACY

even when the degree of inequality in the distribution of income and


wealth was low, this was not necessarily associated with economic demo-
cracy in the sense of collective decision-taking about the allocation of
economic resources.
Similarly, even when direct democracy was introduced in the political
realm, this was not necessarily associated with economic democracy. Thus,
in classical Athens the question of economic power was never a public
issue. The reason was, of course, that the accumulation of capital was not
a structural characteristic of the Athenian democracy and consequendy
part of the dominant social paradigm. Therefore, questions about the way
economic resources were to be allocated did not belong to the public
realm (Aristotle was explicit about it) except to the extent that they
119

referred to the setting of social controls to regulate the limited market, or


to the financing of 'public' spending. No wonder that, as Hansen points
out, 'the Athenians of the classical period had a complicated network of
political institutions but, as far as we can tell from the sources, no parallel
economic organizations'. 120

It was only when the market economy appeared, two centuries ago, that
the question arose of how important economic decisions should be taken
(how, what and for whom to produce) and the corresponding issue of
sharing economic power emerged. It is equally clear that the forms of
economic organization that have prevailed since the emergence of the
market economy, that is, capitalism and socialist statism, were just versions
of economic oligarchy, where economic power was concentrated in the
hands of capitalist and bureaucratic elites.
Thus, in the type of society that emerged since the rise of the market
economy, there was a definite shift of the economy from the private realm
into what Hannah Arendt called the 'social realm', where the nation-state
also belongs. It is this shift that today makes hollow any talk about
democracy which does not also refer to the question of economic power;
to talk about the equal sharing of political power, without conditioning it
on the equal sharing of economic power, is at best meaningless and at
worse deceptive. It is not therefore accidental that the present decline of
representative democracy has led many liberals, social democrats and
others to pay lip service to direct democracy, without referring to its
necessary complement: economic democracy.
From this point of view, I think that statements which, for instance,
describe the USA as 'an unusually free country' (as Noam Chomsky
seemed to suggest in a recent interview with an Athens daily ) are wrong.
121

I think that such an assessment would only stand if we could separate


political freedom and equality from economic freedom and equality. But,
taking into account Chomsky's political work, I think that he would not
122

210
A NEW CONCEPTION OF DEMOCRACY

agree with such a separation of the two freedoms. Therefore, even if one
agrees that a significant degree of political freedom may have been secured
in the USA at the legislative level (though, of course, one may have serious
reservations about how the relevant legislation is implemented with
respect to minorities, etc.), still, the very high degree of economic
inequality and poverty that characterize this country with respect to its
level of economic development would definitely not classify it as 'an
unusually free country'.
So, on the basis of the preliminary definition of economic democracy
given earlier in this chapter we may say that the following conditions
have to be satisfied for a society to be characterized as an economic
democracy:

• That there are no institutionalized economic processes of an oligarchic


nature. This means that all 'macro' economic decisions, namely,
decisions concerning the running of the economy as a whole (overall
level of production, consumption and investment, amounts of work and
leisure implied, technologies to be used, etc.) are taken by the citizen
body collectively and without representation, although 'micro' eco-
nomic decisions at the workplace or the household levels are taken by
the individual production or consumption unit.
• That there are no institutionalized economic structures embodying un-
equal economic power relations. This implies that the means of produc-
tion and distribution are collectively owned and directly controlled by
the demos, the citizen body. Any inequality of income is therefore the
result of additional voluntary work at the individual level. Such addi-
tional work, beyond that required by any capable member of society for
the satisfaction of basic needs, allows only for additional consumption, as
no individual accumulation of capital is possible and any wealth
accumulated, as a result of additional work, is not inherited.

Democracy in the social realm


The satisfaction of the above conditions for political and economic
democracy would represent the reconquering of the political and eco-
nomic realms by the public realm, that is, the reconquering of a true social
individuality, the creation of the conditions of freedom and self-
determination, both at the political and the economic levels. However,
political and economic power are not the only forms of power and
therefore political and economic democracy do not, by themselves, secure
an inclusive democracy. In other words, an inclusive democracy is incon-
ceivable unless it extends to the broader social realm to embrace the
workplace, the household, the educational institution and indeed any

211
TOWARDS AN INCLUSIVE DEMOCRACY

economic or cultural institution which constitutes an element of this


realm.
Historically, various forms of democracy in the social realm were
introduced, particularly during this century, usually in periods of revolu-
tionary activity. However, these forms of democracy not only were short-
lived but seldom extended beyond the workplace (e.g. Hungarian work-
ers' councils in 1956) and the education institution (e.g. Paris student
123

assemblies in 1968).
A crucial issue that arises with respect to democracy in the social realm
refers to relations in the household. Women's social and economic status
has been enhanced this century, as a result of the expanding labour needs
of the growth economy on the one hand and the activity of women's
movements on the other. Still, gender relations at the household level are
mostly hierarchical, especially in the South where most of the world
population lives. However, although the household shares with the public
realm a fundamental common characteristic, inequality and power rela-
tions, the household has always been classified in the private realm.
Therefore, the problem that arises here is how the 'democratization' of the
household may be achieved.
One possible solution is the dissolution of the household/public realm
divide. Thus, some feminist writers, particularly of the eco-feminist
variety, glorify the oikos and its values as a substitute for the polis and its
politics, something that, as Janet Biehl observes, 'can easily be read as an
attempt to dissolve the political into the domestic, the civil into the
familial, the public into the private'. Similarly, some green thinkers
124

attempt to reduce the public realm into an extended household model of


a small-scale, co-operative community. At the other end, some Marxist
123

feminists' attempt to remove the public/private dualism by dissolving all


26

private space into a singular public, a socialized or fraternal state sphere.


However, as Val Plumwood points out, the feminists who argue for the
elimination of household privacy are today a minority although most
feminists stress the way in which the concept of household privacy has
been misused to put beyond challenge the subordination of women.' 27

Another possible solution is, taking for granted that the household
belongs to the private realm, to define its meaning in terms of the freedom
of all its members. As Val Plumwood points out:
When feminists speak of democratizing the household they do not of course
mean that it should be stripped of its private status and become open to the
'tyranny of the majority', state regulation or regulation by general voting in
a single universal, public sphere: they mean that household relationships
themselves should take on the characteristics of democratic relationships, and

212
A NEW CONCEPTION OF DEMOCRACY

that the household should take a form which is consistent with the freedom of
all its members. 128

To my mind, the issue is not the dissolution of the private/public realm


divide. The real issue is how, maintaining and enhancing the autonomy of
the two realms, such institutional arrangements are adopted that introduce
democracy in the household and the social realm in general (workplace,
educational establishment etc.) and at the same time enhance the institu-
tional arrangements of political and economic democracy. In fact, as was
argued above, an effective democracy is inconceivable unless free time is
equally distributed among all citizens, and this condition can never be
satisfied as long as the present hierarchical conditions in the household, the
workplace and elsewhere continue. Furthermore, democracy in the social
realm, particularly in the household, is impossible, unless such institutional
arrangements are introduced which recognize the character of the house-
hold as a needs-satisfier and integrate the care and services provided within
its framework into the general scheme of needs satisfaction.

Ecological democracy
The final question that arises with respect to the conception of an inclusive
democracy refers to the issue of how we may envisage an environmentally
friendly institutional framework that would not serve as the basis of a
Nature-dominating ideology. Some critics of inclusive democracy mis-
conceive the issue as if it was about the guarantees that an inclusive
democracy might offer in ensuring a better relationship of society to
Nature than the alternative systems of the market economy, or socialist
statism. A well-known eco-socialist, for instance, asserted very recently
that 'the "required" ecological consensus among ecotopia's inhabitants
might not be ensured merely by establishing an Athenian democracy
where all are educated and rational'. This is a clear misconception of
129

what democracy is about because, if we see democracy as a process of social


self-institution where there is no divinely or 'objectively' defined code of
human conduct, such guarantees are by definition ruled out. Therefore,
the replacement of the market economy by a new institutional framework
of inclusive democracy constitutes only the necessary condition for a harmo-
nious relation between the natural and social worlds. The sufficient
condition refers to the citizens' level of ecological consciousness. For all
that, the radical change in the dominant social paradigm that will follow
the institution of an inclusive democracy, combined with the decisive role
that paedeia will play in an environmentally friendly institutional frame-
work, could reasonably be expected to lead to a radical change in the
human attitude towards Nature.

213
TOWARDS AN INCLUSIVE DEMOCRACY

In other words, a democratic ecological problematic cannot go beyond


the institutional preconditions that offer the best hope for a better human
relationship to Nature. However, there are strong grounds to believe that
the relationship between an inclusive democracy and Nature would be
much more harmonious than could ever be achieved in a market econ-
omy, or one based on socialist statism. The factors supporting this view
refer to all three elements of an inclusive democracy: political, economic
and social.
At the political level, there are grounds for believing that the creation of
a public space will by itself have a very significant effect in reducing the
appeal of materialism. This is because the public space will provide a new
meaning of life to fill the existential void that the present consumer society
creates. The realization of what it means to be human could reasonably be
expected to throw us back toward Nature. Thus, as Kerry H. Whiteside
points out referring to the work of Hannah Arendt:
Political participation is not just a means to advance a Green agenda. Nor is
it simply a potentially fulfilling activity that would remain available in a
world less given to material consumption. A community that takes pride in
collective deliberation fosters a way of life that limits the appeal of labour and
work . . . a world in which labour is seen as only one part of a meaningful life
will find consumption less tempting. 130

Also, at the economic level, it is not accidental that, historically, the


process of destroying the environment en masse has coincided with the
process of marketization of the economy. In other words, the emergence
of the market economy and of the consequent growth economy had
crucial repercussions on the society-Nature relationship and led to the rise
of the growth ideology as the dominant social paradigm. Thus, an
'instrumentalist' view of Nature became dominant, in which Nature was
seen as an instrument for growth, within a process of endless concentration
of power. If we assume that only a confederal society could secure an
inclusive democracy today, it would be reasonable to assume further that
once the market economy is replaced by a democratically run confederal
economy, the grow-or-die dynamics of the former will be replaced by the
new social dynamic of the latter: a dynamic aiming at the satisfaction of the
community needs and not at growth per se. If the satisfaction of commu-
nity needs does not depend, as at present, on the continuous expansion of
production to cover the 'needs' that the market creates, and if the link
between society and economy is restored, then there is no reason why the
present instrumentalist view of Nature will continue conditioning human
behaviour.
Finally, democracy in the broader social realm could also be reasonably

214
A NEW CONCEPTION OF DEMOCRACY

expected to be environmentally friendly. The phasing out of patriarchal


relations in the household and hierarchical relations in general should
create a new ethos of non-domination which would engulf both First and
Second Nature. In other words, the creation of democratic conditions in
the social realm should be a decisive step in the creation of the sufficient
conditions for a harmonious nature-society relationship.
But, apart from the above political and economic factors, an ecological
factor is involved here, which strongly supports the belief in a harmonious
democracy—Nature relationship: the 'localist' character of a confederal
society might also be expected to enhance its environmentaly friendly
character. Thus, as Martin Khor of the Third World Network argues,
'Local control, while not necessarily sufficient for environmental protec-
tion, is necessary, whereas, under state control, the environment neces-
sarily suffers.' The necessity of local control becomes obvious if we take
131

into account the fact that the environment itself, as Elinor Ostrom puts it,
is local:
Small scale communities are more likely to have the formal conditions
required for successful and enduring collective management of the commons.
Among these are the visibility of the commons resources and behaviour toward
them, feedback on the effect of regulations, widespread understanding and
acceptance of the rules and their rationales, the values expressed in these rules
(equitable treatment of all and protection of the environment) and the backing
of values by socialization, standards and strict enforcement. 132

Furthermore, it is reasonable to assume - and the evidence about the


remarkable success of local communities in safeguarding their environ-
ments is overwhelming — that when people rely directly on their natural
133

surroundings for their livelihood, they will develop an intimate knowl-


edge of those surroundings, which will necessarily affect positively their
behaviour towards them. However, the precondition for local control of
the environment to be successful is that the community depends on its
natural surroundings for its long-term livelihood and that it therefore has
a direct interest in protecting it — another reason why an ecological society
is impossible without economic democracy.
In conclusion, the present-day ecological crisis is basically susceptible to
two solutions: one solution presupposes radical decentralization. Thus, the
economic effectiveness of the renewable forms of energy (solar, wind, etc.)
depends crucially on the organization of social and economic life in smaller
units. This solution, however, has already been marginalized by the
internationalized market economy, precisely because it is not compatible
with today's concentration of economic political and social power. This is
also why alternative solutions are being advanced which are supposed to

215
TOWARDS AN INCLUSIVE DEMOCRACY

concentrate many advantages of renewable energy, but without necessitat-


ing any radical changes in the market/growth economy. For example, the
programme for the 'International Thermonuclear Reactor' is being ad-
vertised as producing clean, safe and unlimited energy. What is usually not
mentioned is that for this new form of energy to be commercially viable,
it should be produced from vast stations providing massive centralized
power. As a researcher aptly stresses, 'Size is vital to fusion because
efficiency requires building big'.
134

A new conception of citizenship


After this discussion of the fundamental components of an inclusive
democracy, we are now in a position to summarize the conditions
necessary for democracy and their implications for a new conception of
citizenship. Democracy is incompatible with any form of a closed system
of ideas or dogmas at the ideological level and with any concentration of
power at the institutional level. So, democracy is founded on a self-
reflective choice (not inspired by any religious beliefs or dogmas) and on
institutional arrangements which secure the equal sharing of political,
economic and social power. But, as was stated above, these are just
necessary conditions for democracy. The sufficient condition so that
democracy will not degenerate into some kind of 'demago-cracy', where
the demos is manipulated by a new breed of professional politicians, is
crucially determined by the citizens' level of democratic consciousness
which, in turn, is conditioned by paedeia.
Historically, the above conditions for democracy have never been
satisfied fully. We already saw why the Athenian democracy was only a
partial democracy. Similarly, the 'people's democracies' that collapsed a
few years ago did not satisfy any of the above conditions, although they
represented a better spreading of economic power (in terms of income and
wealth) than liberal 'democracies'. Finally, today's liberal 'democracies',
also, do not satisfy the above conditions, although they represent a better
spreading of political power than socialist 'democracies'. However, an
argument can be put forward that today's advanced liberal 'democracies',
like classical democracy, may satisfy the ideological condition in the sense
that they are not rooted on any divine and mystical dogmas, or 'laws' about
social change.
In conclusion, the above conditions for democracy imply a new
conception of citizenship: economic, political, social and cultural. Thus,
political citizenship involves new political structures and the return to the
classical conception of politics (direct democracy). Economic citizenship
involves new economic structures of demotic ownership and control of
economic resources (economic democracy). Social citizenship involves self-

216
A NEW CONCEPTION OF DEMOCRACY

management structures at the workplace, democracy in the household and


new welfare structures where all basic needs (to be democratically deter-
mined) are covered by community resources, whether they are satisfied in
the household or at the community level. Finally, cultural citizenship
involves new democratic structures of dissemination and control of
information and culture (mass media, art, etc.), which allow every member
of the community to take part in the process and at the same time develop
his/her intellectual and cultural potential.
Although this sense of citizenship implies a sense of community, which,
defined geographically, is the fundamental unit of political, economic and
social life, still, it is assumed that it interlocks with various other commu-
nities (cultural, professional, ideological, etc.). Therefore, the community
and citizenship arrangements do not rule out cultural differences or other
differences based on gender, age, ethnicity and so on but simply provide
the public space where such differences can be expressed; furthermore,
these arrangements institutionalize various safety valves that aim to rule out
the marginalization of such differences by the majority. What therefore
unites people in a political community is not some set of common values,
imposed on the community by a nationalist ideology, a religious dogma, a
mystical belief, or an 'objective' interpretation of natural or social 'evolu-
tion' , but the democratic institutions and practices, which have been set up
by citizens themselves.
It is obvious that the above new conception of citizenship has very little
in common with the liberal and socialist definitions of citizenship which
are linked to the liberal and socialist conceptions of human rights respec-
tively. Thus, for the liberals, the citizen is simply the individual bearer of
certain freedoms and political rights recognized by law which, supposedly,
secure equal distribution of political power. Also, for the socialists, the
citizen is the bearer not only of political rights and freedoms but, also, of
some social and economic rights, whereas for Marxists the citizenship is
realized with the collective ownership of the means of production.
Finally, the definition of citizenship here is not related to the current
social-democratic discourse on the subject, which, in effect, focuses on the
institutional conditions for the creation of an internationalized market
economy 'with a human face'. The proposal for instance for a redefinition
of citizenship within the framework of a 'stakeholder capitalism' belongs
135

to this category. This proposal involves an 'active' citizenship, where


citizens have 'stakes' in companies, the market economy and society in
general and managers have to take into account these stakes in the running
of the businesses and social institutions they are in charge of.
The conception of citizenship adopted here, which could be called a
democratic conception, is based on our definition of inclusive democracy

217
TOWARDS AN INCLUSIVE DEMOCRACY

and presupposes a 'participatory' conception of active citizenship, like the


one implied by the work of Hannah Arendt. In this conception,
136

'Political activity is not a means to an end, but an end in itself; one does not
engage in political action simply to promote one's welfare but to realize
the principles intrinsic to political life, such as freedom, equality, justice,
solidarity, courage and excellence'. It is therefore obvious that this
137

conception of citizenship is qualitatively different from the liberal and


social-democratic conceptions which adopt an 'instrumentalist' view of
citizenship, i.e. a view which implies that citizenship entitles citizens to
certain rights that they can exercise as means to the end of individual
welfare.
To conclude, this chapter, I think that today, more than ever in the past,
the choice we have to make is clear and can be described as 'democracy or
barbarism'. Democracy, however, does not mean the various oligarchic
regimes that call themselves democratic. It also does not mean an anachro-
nistic return to the classical conception of democracy. Democracy can
only mean a synthesis of the two major historical traditions, namely, the
democratic and the socialist with the radical Green, feminist and libertarian
traditions.

Notes
1. See Konstantinos Kavoulakos, 'The relationship of realism and utopianism in
the theories of democracy of Jurgen Habermas and Cornelius Castoriadis',
Society and Nature, Vol. 2, No. 3 (1994), pp. 69-98.
2. Thomas Martin, 'The end of sovereignty', Democracy and Nature (formerly
Society and Nature), Vol. 3, No. 2 (1996).
3. As it was recently observed: 'For the first time, instead of being primarily part
of national economy, cities now form part of a world system, sometimes with
closer connections to each other than to the countries of which they form
part', Sir Richard Rogers' Reith Lecture - quoted in The Observer (19 Feb.
1995).
4. See Murray Bookchin, From Urbanization to Cities (London: Cassell, 1995),
Ch. 6; and Cornelius Castoriadis, Philosophy, Politics, Autonomy (Oxford:
Oxford University Press, 1991), Ch. 7.
5. See Charlotte Raven, The Observer (30 July 1995).
6. Hannah Arendt, The Human Condition (Chicago: The University of Chicago
Press, 1958), p. 45.
7. Quoted by Neil Harding, 'The Marxist-Leninist detour' in Democracy, the
Unfinished Journey, 508 BC to AD 1993, John Dunn (ed.) (Oxford: Oxford
University Press, 1992), p. 173.
8. Neil Harding, 'The Marxist-Leninist detour', p. 178.
9. Anthony H. Birch, The Concepts and Theories of Modern Democracy (London:
Routledge, 1993), p. 45.
10. Anthony H. Birch, The Concepts and Theories of Modem Democracy, p. 48.
11. Anthony H. Birch, The Concepts and Theories of Modern Democracy, p. 48.

218
A NEW CONCEPTION OF DEMOCRACY

12. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes
(Oxford: Blackwell, 1991), p. 81.
13. Cornelius Castoriadis, Philosophy, Politics, Autonomy, p. 221. See also, for an
incisive analysis of the nature of the Athenian democracy, Castoriadis's The
Ancient Greek Democracy and its Significance for us Today (Athens: Upsilon,
1986) (in Greek).
14. David Beetham, 'Liberal democracy and the limits of democratization' in
Prospects for Democracy, David Held (ed.) (Cambridge: Polity Press, 1993), p.
55.
15. David Beetham, 'Liberal democracy and the limits of democratization',
p. 58.
16. Isaiah Berlin, 'Two concepts of liberty' in Isaiah Berlin, Four Essays on Liberty
(Oxford: Oxford University Press, 1969).
17. Anthony H. Birch, The Concepts and Theories of Modern Democracy, p. 101.
18. Anthony H. Birch, The Concepts and Theories of Modem Democracy, pp.
102-3.
19. Friedrich Engels, Anti-Duhring (London: Lawrence & Wishart, 1969),
p. 137.
20. Leszek Kolakowski, Main Currents of Marxism, Vol. 1 (Oxford: Oxford
University Press, 1981), p. 387.
21. G.P. Maximoff (ed.), The Political Philosophy of Bakunin (New York: The
Free Press, 1953), p. 265.
22. Alix Kates Shulman (ed.), Red Emma Speaks (New York: Vintage Books,
1972), p. 98.
23. William McKercher, 'Liberalism as democracy: authority over freedom',
Democracy and Nature (formerly Society and Nature) Vol. 3, No. 2 (1996).
24. Milton & Rose Friedman, Free to Choose (Harmondsworth: Penguin,
1980).
25. William McKercher, 'Liberalism as democracy: authority over freedom'.
26. William McKercher, 'Liberalism as democracy: authority over freedom'.
27. Murray Bookchin, From Urbanization to Cities, p. 68. See also his article
'Communalism: the democratic dimension of anarchism', Democracy and
Nature (formerly Society and Nature) Vol. 3, No. 2 (1996).
28. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes,
p. 75.
29. Cornelius Castoriadis, Philosophy, Politics, Autonomy, p. 164.
30. Cornelius Castoriadis, Philosophy, Politics, Autonomy, pp. 105-6.
31. Cornelius Castoriadis, Philosophy, Politics, Autonomy, p. 76.
32. Murray Bookchin, 'Communalism: the democratic dimension of anar-
chism', Democracy and Nature, Vol. 3, No. 2 (1996), pp. 2-4.
33. L. Susan Brown, The Politics of Individualism (Montreal: Black Rose Books,
1993), p. 11.
34. Murray Bookchin, The Philosophy of Social Ecology (Montreal: Black Rose
Books, 1995), p. 151.
35. Bhikhu Parekh, 'The cultural particularity of liberal democracy' in Prospects
for Democracy, David Held (ed.), pp. 168-70.
36. Bhikhu Parekh, 'The cultural particularity of liberal democracy', p. 172.
37. L. Susan Brown, The Politics of Individualism, p. 3.
38. Cornelius Castoriadis, Philosophy, Politics, Autonomy, p. 121.
39. For the logical contradictions of Right-wing libertarianism, see Alan

219
TOWARDS AN INCLUSIVE DEMOCRACY

Haworth, Anti-Libertarianism: Markets, Philosophy and Myth (London:


Routledge, 1994).
40. See Konstantinos Kavoulakos, 'The relationship of realism and utopianism in
the theories of democracy ofjurgen Habermas and Cornelius Castoriadis', as
regards political concentration, and Takis Fotopoulos, 'The end of socialist
statism', as regards economic concentration, Society and Nature, Vol. 2, No. 3
(1994), pp. 69-97 and 11-68, respectively.
41. Alan Haworth, Anti-Libertarianism, pp. 37-40.
42. Murray Bookchin, From Urbanization to Cities, p. 43. As Bookchin points out
'until recent times, professional systems of governance and violence coex­
isted with richly articulated community forms at the base of society . . . which
were largely beyond the reach of centralised state authorities'. Ibid.
43. Anthony H. Birch, The Concepts and Theories of Modem Democracy, p. 58.
44. Bhikhu Parekh, 'The cultural particularity of liberal democracy', p. 165.
45. According to Aristotle, ' . . . I say that the appointment by lot is commonly
held to be characteristic of democracy, whereas the process of election for
that purpose is looked upon as oligarchic'; Aristotle, Politics, Book IV, 1294b,
John Warrington (ed.) (London: Heron Books, 1934).
46. Thomas Martin, 'The end of sovereignty'.
47. For Bookchin, 'the "state", as we know it in modem times, could hardly be said
to exist among the Greeks' (From Urbanization to Cities, p. 43), whereas for
Castoriadis, 'the Polis is not a "state" since in its explicit power - the positing of
nomos (legislation), dike (jurisdiction) and telos (government) - belongs to the
whole body of citizens' (Philosophy, Politics, Autonomy, p. 157).
48. Aristotle was clear on this when he discussed the various types of regimes:
'next we ask: what should be the sovereign in polis? The people? The rich?
The better sort of man? The one best man? Or a tyrant?' Aristotle, Politics,
Book III, 1281a. He then goes on to define democracy as the case where the
free citizens are sovereign; Aristotle, Politics, Book IV, 1290b.
49. Hannah Arendt, The Human Condition, pp. 32-3.
50. William McKercher, 'Liberalism as democracy'.
51. April Carter seems to agree with the conclusion that direct democracy does
not involve a form of 'rule': 'The only authority that can exist in a direct
democracy is the collective "authority" vested in the body politic . . . it is
doubtful if authority can be created by a group of equals who reach decisions
by a process of mutual persuasion'; April Carter, Authority and Democracy
(London: Routledge, 1979), p. 380. She further states, 'commitment to
direct democracy or anarchy in the socio-political sphere is incompatible
with political authority'; p. 69.
52. Cornelius Castoriadis, Philosophy, Politics, Autonomy, p. 156.
53. Εντεύθεν δ' ελήλυθε το μή άρχεσθαι, μάλιστα μεν υπο μηδενός, ει δε
μή, κατα μέρος. Και συμβάλλεται ταύτη προς την ελευθερίαν την
κατα το ίσον' Aristotle, Politics, Book VI, 1317b.
54. Aristotle, Politics, Book I I , 1266b, 1267a.
55. K. Marx, Pre-capitalist Economic Formations (London: Lawrence and Wishart,
1964), pp. 72-3.
56. See, for instance, Hindess and Hirst, Pre-Capitalist Modes of Production (Lon­
don: Routledge & Kegan Paul, 1975), p. 82.
57. The distinction between democrats and oligarchs, on the basis of the
criterion used in the text, is consistent with the definition of democracy

220
A NEW CONCEPTION OF DEMOCRACY

given by Aristotle as the case where government is in the hands of the


majority of the poor and free citizens, and of oligarchy as the case in which
government is in the hands of the minority of the rich and aristocrats
(Aristotle, Politics, 1290b, 20).
58. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes,
p. 98.
59. K. Paparregopoulos, History of the Greek Nation, N. Bees (ed.) (Athens:
Seferlis, 1955), Vol. A l , p. 218 (in Greek). See also Mogens Herman Hansen,
The Athenian Democracy in the Age of Demosthenes, pp. 108-15.
60. Aristotle, The Athenian Constitution, Ch. viii, 4.
61. K. Paparregopoulos, History of the Greek Nation, Vol. A l , p. 217.
62. A. Prokopiou, Athens (London: Elek Books, 1964), p. 97.
63. Aristotle, Politics, 1284a, 20.
64. A. Prokopiou, Athens, p. 148. See also Mogens Herman Hansen, Tlie
Athenian Democracy in the Age of Demosthenes, p. 37.
65. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes,
p. 97.
66. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes,
p. 317.
67. K. Paparregopoulos, History of the Greek Nation, Vol. A2, p. 118.
68. Aristotle, The Athenian Constitution, Ch. xxiv, 3. See also Mogens Herman
Hansen, The Athenian Democracy in the Age of Demosthenes, p. 319.
69. K. Paparregopoulos, History of the Greek Nation, Vol. A2, p. 118.
70. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes,
p. 140.
71. K. Paparregopoulos, History of the Greek Nation, Vol. A2, p. 146.
72. K. Paparregopoulos, History of the Greek Nation, Vol. A2, pp. 258-9.
73. K. Paparregopoulos, History of the Greek Nation, Vol. A2, p. 146.
74. Murray Bookchin, Remaking Society (Montreal: Black Rose Books, 1989),
p. 50.
75. Anthony Birch, The Concepts and Theories of Modem Democracy, p. 50.
76. Hannah Arendt, On Revolution (London: Penguin, 1990), pp. 237-8.
77. John Dunn, 'Conclusion' in Democracy, the Unfinished Journey, 508 BC to AD
1993, pp. 247-8.
78. John Dunn, 'Conclusion' in Democracy, the Unfinished Journey, 508 BC to AD
1993, p. 251.
79. Karl Marx, Critique of the Gotha Programme (Moscow: Progress Publishers,
1937), p. 25.
80. V.I. Lenin, The State and Revolution (Moscow: Foreign Languages Publishing
House, 1917), pp. 31-2.
81. V.I. Lenin, The State and Revolution, p. 165.
82. V.I. Lenin, The State and Revolution, pp. 174-5.
83. Murray Bookchin, The Ecology of Freedom: The Emergence and Dissolution of
Hierarchy (Montreal: Black Rose Books, 1991), p. 69.
84. For an analysis of these trends, see Andrew Gamble, 'Class politics and radical
democracy', New Left Review, No. 164 (July-Aug. 1987), p. 115.
85. See Perry Anderson, 'The affinities of Norberto Bobbio', New Left Review,
No. 170 (July-Aug. 1988), p. 21.
86. Ralph Miliband, 'Fukuyama and the socialist alternative', New Left Review,
No. 193 (May-June 1992).

221
TOWARDS AN INCLUSIVE DEMOCRACY

87. Jurgen Habermas, 'Three normative models of democracy', Constellations,


Vol. 1, No. 1 (1994), pp. 1-10.
88. Cornelius Castoriadis, 'La democratic comme procedure et comme regime'
in La Montee de Vinsignificance, Les Carrefours du Labyrinthe IV (Paris: Seuil,
1996), pp. 221-41 (reprinted in Democracy and Nature (Greek edition), No. 1
(1996)).
89. James O'Connor, 'Democracy and ecology', Capitalism, Nature, Socialism,
Vol. 4, No. 4 (Dec. 1993).
90. John Dryzek, 'Ecology and discursive democracy', Capitalism, Nature, Social-
ism, Vol. 3, No. 2 (June 1992), p. 37.
91. Chantal Mouffe, 'Democratic politics today' in Dimensions of Radical
Democracy, Chantal Mouffe (ed.) (London: Verso, 1992, 1995), p. 13.
92. Chantal Mouffe, 'Democratic politics today' in Dimensions of Radical
Democracy, p. 1.
93. Chantal Mouffe, 'Democratic politics today' in Dimensions of Radical
Democracy, p. 2.
94. Chantal Mouffe, 'Democratic citizenship and the political community' in
Dimensions of Radical Democracy, p. 238.
95. David Miller, 'Deliberative democracy and social choice' in Prospects for
Democracy, David Held (ed.) (Cambridge: Polity Press, 1993), pp. 74-92.
96. David Miller, Market, State and Community: Theoretical Foundations of Market
Socialism (Oxford: Clarendon Press, 1989).
97. David Miller, Market, State and Community, p. 10.
98. David Miller, Market, State and Community, pp. 148-9.
99. Christopher Pierson, 'Democracy, markets and capital: are there necessary
economic limits to democracy?' in Prospects for Democracy, David Held (ed.),
pp. 193-4.
100. Paul Hirst, 'Associational democracy' in Prospects for Democracy, pp. 112-35.
See also Paul Hirst, Associative Democracy: New Forms of Economic and Social
Governance (Amherst: University of Massachusetts Press, 1994).
101. Paul Hirst, 'Associational democracy', p. 131.
102. Paul Hirst, 'Associational democracy', p. 128.
103. Paul Hirst, 'Associational democracy', p. 117.
104. Paul Hirst, 'Associational democracy', p. 125.
105. Paul Hirst, 'Associational democracy', p. 127.
106. Paul Hirst, 'Associational democracy', p. 130.
107. Paul Hirst, 'Associational democracy', p. 112.
108. Paul Hirst, 'Associational democracy', p. 113.
9. David Held, 'Democracy: from city-states to a cosmopolitan order?' in Prospects
for Democracy, pp. 13-52. See also, Held's latest book Democracy and the Global
Order, (Cambridge: Polity Press, 1995), where the proposal for a cosmopolitan
model of democracy is further expanded. In this book, the author, starting from
a liberal definition of autonomy in terms of equal rights (p. 147), which has no
connection whatsoever with the classical notion of autonomy and the notion
developed in the present book, ends up with a list of proposals, similar to the
ones I outlined in the text which, within the context of the logic and dynamic
of the internationalized market economy that the author takes for granted,
amount to little more than wishful thinking.
110. David Held, 'Democracy: from city-states to a cosmopolitan order?' in
Prospects for Democracy, pp. 40—1.

222
A NEW CONCEPTION OF DEMOCRACY

111. David Held, 'Democracy: from city-states to a cosmopolitan order?' in


Prospects for Democracy, p. 42.
112. David Held, 'Democracy: from city-states to a cosmopolitan order?' in
Prospects for Democracy, p. 43.
113. Mogens Herman Hanson, The Athenian Democracy in the Age of Demosthenes,
p. 308.
114. Mogens Herman Hanson, The Athenian Democracy in the Age of Demosthenes,
p. 2.
115. Cornelius Castoriadis, Philosophy, Politics, Autonomy, p. 113.
116. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes,
p. 311.
117. Cornelius Castoriadis, Philosophy, Politics, Autonomy, p. 113.
118. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes,
p. 320.
119. Aristotle, Politics, Book 1.
120. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes,
p. 63.
121. Eleftherotypia (31 July 1995).
122. See e.g., Noam Chomsky, The Prosperous Few and the Restless Many (Berke-
ley, California: Odonian Press, 1993), pp. 18-20.
123. Andy Anderson, Hungary 56 (London: Solidarity, 1964).
124. Janet Biehl, Rethinking Ecofeminist Politics (Boston: South End Press, 1991),
p. 140.
125. Ted Trainer, Abandon Affluence! (London: Zed Books, 1985).
126. Pat Brewer, Feminism and Socialism: Putting the Pieces Together (Sydney: New
Course, 1992).
127. Val Plumwood, 'Feminism, privacy and radical democracy', Anarchist
Studies, Vol. 3, No. 2 (Autumn 1995), p. 107.
128. Val Plumwood, 'Feminism, privacy and radical democracy', p. 111.
129. David Pepper, Modem Environmentalism (London: Routledge, 1996),
p. 324.
130. Kerry H. Whiteside, 'Hannah Arendt and ecological polities', Environmental
Ethics, Vol. 16, No. 4 (Winter 1994), p. 355.
131. M. Khor, presentation at World Rainforest Movement (1 March 1992),
New York, quoted in Tlie Ecologist, Vol. 22, No. 4 (July-Aug. 1992).
132. E. Ostrom, 'The rudiments of a revised theory of the origins, survival and
performance of institutions for collective action', Working Paper 32 (Indiana
University, Workshop in Political Theory and Political Analysis, Bloom-
ington, 1985).
133. For evidence, see The Ecologist, Vol. 22, No. 4 (July-Aug. 1992).
134. J. Vidal, The Guardian (16 Nov. 1991).
135. See Will Hutton, The State We're In (London: Jonathan Cape, 1995), Ch. 12.
136. Maurizio Passerin d'Entreves, 'Hannah Arendt and the idea of citizenship' in
Dimensions of Radical Democracy, pp. 145-68.
137. Maurizio Passerin d'Entreves, 'Hannah Arendt and the idea of citizenship',
p. 154.

223
CHAPTER 6

A Confederal Inclusive
Democracy

The aim of this chapter is to explore the conditions under which an


inclusive democracy, the elements of which were described in the last
chapter, could work under today's conditions. Even though it is up to the
citizens' assemblies of the future to design the form an inclusive democracy
will take, I think that it is important to demonstrate that such a form of
society is not only necessary, as I tried to show in the first part of the book,
but feasible as well. This is particularly important today when the self-
styled 'Left' has abandoned any vision of a society that is not based on the
market economy and liberal 'democracy', which they take for granted, and
dismiss any alternative visions as 'utopian' (in the negative sense of the
word). It is therefore necessary to show - as I tried to do in the first part of
the book - that it is in fact the Left's vision of 'radical' democracy which,
in taking for granted the present internationalized market economy, may
be characterized as utterly unrealistic. But I think it is equally important to
attempt to outline how an alternative society based on an inclusive
democracy might try to sort out the basic socio-economic problems that
any society has to deal with, under conditions of scarce resources and not
in an imagined state of post-scarcity. Such an attempt may not only help
supporters of the democratic project form a more concrete idea of the
society they wish to see, but also assist them in addressing the 'utopianism'
criticisms raised against them.
In the first part of the chapter the relationship of democracy to
community is examined, in an attempt to show why an inclusive democ-
racy, under today's conditions, can only be a confederation of commun-
ities, in which the communities are the basic units of political, social and
economic life.
In the second part, the conditions for a confederal economic democracy
are specified and the two traditional methods of allocating resources
(market and central planning), as well as the proposal for a type of
participatory planning, are discussed.

224
A CONFEDERAL INCLUSIVE DEMOCRACY

In the final part, a model of economic democracy is outlined, based on a


new kind of democratic planning which is combined with an artificial
'market'. The explicit aim of this model is to meet the basic needs of all
citizens in the confederation, as well as those of the non-basic needs that
citizens in each community decide to meet, within an institutional frame-
work of a scarcity society which is moneyless, marketless and stateless.

Democracy and community


Today, few doubt, and research has conclusively shown, that participation
should infuse any model of social change; in other words, that social change
needs to be at least initiated at the local level. The proposal for a stakeholder
market economy is just another expression of the current discourse that aims
at enhancing 'participation'. The real issue therefore is not whether the
participatory model of social change is desirable or not, but whether any real
participation is feasible within the present institutional framework. This is a
framework which is defined at the political level by liberal forms of
democracy, and at the economic level by the internationalized market
economy and its institutions (TNCs, IMF, World Bank, etc.) - a frame-
work which, today, tends to develop into a series of networks of city regions
within federated structures of political power. In short, the real issue is
decentralization versus remaking society.
In this context, it is interesting to note that today many of the proposals
either to decentralize or to remake society are centred at the community
level. Thus, on the one hand, there are proposals to decentralize society, in
the sense of empowering communities at the expense of the centre and, 1

on the other, there are radical proposals to remake society on the basis of
a new community-based social system. This is not of course a surprising
2

development, as it just represents the inevitable consequence of the


collapse of socialist statism and the failure of'actually existing capitalism'.
At the same time, the void created by the present decline of statism,
particularly in Western Europe, has not been filled by a process that
empowers communities. The decay, therefore, of communities and com-
munity values, which was enhanced by the current acceleration of the
marketization process, combined with the drastic rise of unemployment
and the decline of the welfare state following the collapse of the social-
democratic consensus, could go a long way to explain the attempt to
revive the community in the current discourse.

The meaning of community


A new consciousness is emerging today among radical movements in the
North and the various community movements in the South — a conscious-
ness which ascribes the basic cause of the failure of both the market

225
TOWARDS AN INCLUSIVE DEMOCRACY

economy and socialism to the concentration of power. It is therefore


becoming increasingly understood that collective and individual auton-
omy can only be achieved in the context of a radical dispersion of
power.
However, the creation of an inclusive democracy is today possible only
at the level of the confederated communities. It is at the community level
that the demos might revive. It is also at the level of the confederated
communities that the conditions that would make a confederal economic
democracy possible could be fulfilled (see p. 237); finally, it is, again, at the
same level of confederated communities that the preconditions for an
ecological democracy can be met.
Despite the revival of interest in the community, the concept of the
community is still a notoriously disputed — some even say anachronistic -
concept. The issue, therefore, is how we may develop a concept of the
community as the fundamental social, political and economic unit on
which an inclusive democracy could be founded; in other words, a
concept in which the community is seen as the foundation of a third social
system beyond socialist statism and the neoliberal market economy.
A useful starting point in this effort might be David Clark's definition of
community in terms of what he calls 'ecumenicity' (defined as a sense of
solidarity that enables people to feel themselves part of and not hostile
towards wider society) and autonomy (defined as a sense of significance that
enables people to feel they have a role to play in the social scene, a role that
is determined by rules that members of the community choose themselves
and feel free to modify). 3

But, to my mind, the ecumenicity and autonomy elements constitute


only the necessary conditions defining community relations. I think that
community members cannot have a real sense of solidarity, and especially
a real sense of significance, unless a third element is present, which defines
the institutional framework of a community — what I would call the
democracy element. The democracy element, which rules out the concentra-
tion of political and economic power, is in fact the sufficient condition for
any true community. Historically, this has always been the case. Thus, as
Michael Taylor has shown, drawing on the experience of stateless primi-
4

tive societies, peasant communities and 'intentional' (utopian) commun-


ities, a community requires rough economic equality, as well as relations
between its members that involve reciprocity (mutual aid, co-operation,
sharing) and that are direct (i.e. not mediated by representatives, leaders,
etc.) and many-sided. 5

So, taking into account all three of these elements (ecumenicity,


autonomy, democracy) and adding the confederal element, which is
necessary to avoid the trap of localism, we may end up with a definition of

226
A CONFEDERAL INCLUSIVE DEMOCRACY

community like the one recently put forward by Bookchin as 'a municipal
association of people reinforced by its own economic power, its own
institutionalization of the grass roots, and the confederal support of nearby
communities organized into a territorial network on a local and regional
scale'. 1 think that starting from a definition of community, like the above,
6

we may outline a model of a confederal inclusive democracy.

Communitarianism: the false 'third' way


The concept of community, however, is not used only by supporters of a
radical project to remake society. 'Community' has become fashionable
again, although of course the usual definitions given to the term differ
widely from the conception given in the previous section. Thus, religious
'Communitarianism', with its notion of 'community' that is irrelevant to
the political organization of society, competes with a kind of cultural
Communitarianism, where the revival of the 'community' explicitly aims
at the restoration of old community values (solidarity, mutual aid, etc.) or
the creation of new common values. To the left of these tendencies a more
radical community economic development movement has developed
lately which, however, by not challenging directly the present institutional
framework, has already been marginalized. But let us explore first the
cultural Communitarianism (from now on 'communitarianism') which
has particularly flourished in the USA since the late 1980s.
Communitarians concentrate their efforts on cultural factors and declare
themselves in favour of enhancing traditional hierarchical structures like
the family and creating new ones. Thus, some argue for compulsory
community service for teenagers, others back curfews on them, increased
police powers to search for drugs and guns in urban areas and so on. 7

However, the real objective of communitarians is to mobilize citizens,


first, in an effort to alleviate the effects of the social decay that the
neoliberal consensus involves (crime explosion, drug abuse, moral irre-
sponsibility, etc.) and, second, to recover some of the welfare services
which are presently effectively undermined by the demise of the welfare
state.
Therefore, communitarianism is, in effect, a middle-class movement
against the social symptoms of the neoliberal consensus and the inter-
nationalization of the market economy. So, it is not accidental that, today,
parts of the old social-democratic movement, like, for instance, the British
Labour Party, turn to various forms of 'Communitarianism' and preach the
empowerment of communities as counterbalancing forces to the market
and the supranational federal forms of statism which are presently under
formation. Communitarians, by working to recover some of the welfare
services abandoned by the state, offer the opportunity of creating an image

227
TOWARDS AN INCLUSIVE DEMOCRACY

of a 'neoliberal consensus with a human face' at no extra cost to the state


budget!
It is obvious that communitarians want to have their cake and eat it,
since, in effect, they wish to enjoy the privileges which the market
economy and its internationalization allows them to enjoy, without paying
the price of living in a society of tremendous inequality in the distribution
of income and wealth. It is not, therefore, surprising that the socio-
economic framework is ruled out of the communitarian problematic, and
Etzioni, the guru of Communitarianism, gives an unequivocal answer
when asked about socio-economic rights and the communitarian eco-
nomic agenda. 'The short answer is,' he says, 'there is none.' Still, Etzioni
8

has no qualms in presenting his Communitarianism as a 'third' way


between liberalism and socialism! 9

This position is, of course, consistent with the fact that any real revival
of communities is impossible within the framework of today's inter-
nationalized market economy where the economic life of every commu-
nity, that is, the jobs, incomes and welfare of every member of the
community, is utterly dependent on economic forces, which no commu-
nity can control any more. Global free trade and movement of capital
means that no community can be economically viable, since the level of
economic viability has now moved to the new city regions and the
multinational networks. No wonder that the communitarian argument is
full of contradictions, particularly when the declared ultimate aim is a
social fabric 'designed to facilitate fraternity' while at the same time the
price mechanism is cheered enthusiastically:
Democratic Communitarianism supports multiple sources of economic initia-
tive as a matter of principle. It offers 'two cheers for the price mechanism'. . .
the social principle is to permeate right through to the inner workings of a
decentralized, primarily market-based economic system . . . Economic Com
munitarianism . . . means developing a social fabric in and around the
economic system which would, at the very least, make such interactions as are
bound to exist between economic units and government and society more
open, constitutional and accountable. At best, such a fabric would be designed
to facilitate fraternity, inter-institutional associateship and democratic partici-
pation whilst also nurturing a balanced, sustained form of economic
development. 10

It is therefore obvious that Communitarianism could play a significant


role with respect to the present phase of marketization, as it is perfectly
compatible with a shift of the power centre away from the decaying
nation-state, without challenging in any way the market economy and its
internationalization. From this viewpoint, it is not accidental that Com-

228
A CONFEDERAL INCLUSIVE DEMOCRACY

munitarianism is supported not only by social democrats but also by pure


neoliberals in the USA and in Europe.
Similar arguments could be put forward against the type of a more
radical Communitarianism presently expanding, particularly in North
America and Britain, in the form of what is usually called Community
Economic Development (CED). This involves a strategy of gradual
removal of land, labour and capital from the market economy (through the
establishment of Community Land Trusts, community financial institu-
tions, community enterprises, etc.) with the double aim of creating a
community culture and making private firms and the state socially
responsible. However, CED, although useful with respect, in particular, to
its first objective, cannot seriously challenge the present concentration of
political and economic power, as supporters of this movement themselves
admit:
New forms of economic activity and institutions created in the community will
never be adequate, within an economy dominated by private enterprise, to
generate enough jobs and wealth at a local level to compensate for the
consequences of economic centralization outside of the community. . . . Since
communities do not control in any direct way economic resources, partnerships
with both government agencies and representatives of business have been
accepted as inevitable by CED activists in order to secure both recognition and
resources. These are tricky relationships because of the inequality of
power."

It is therefore obvious that only a truly radical economic and political


restructuring at the community level can create again the conditions for
the revival of communities, in fact, for the transcendence of both the
market economy and statism as well as the corresponding forms of statist
democracy. CED, by not aiming at establishing a political and economic
power base at the community level, could easily end up as just another
hopeless attempt at radical decentralization. Within the existing institu-
tional framework, radical decentralization is neither feasible nor desirable.
It is not feasible because, in the context of the present internationalized
market economy, any attempt to create real counterbalancing centres of
power would inevitably fail, unless these centres of power are compatible
with the logic and dynamic of competitiveness. It is not desirable because
the problem of democracy today is not just how to force the present
centres of political and economic power to delegate some of their power
to local centres — a move that would simply reproduce at the local level the
present concentration of power at the centre. The problem is how we can
create new forms of social organization that do not presuppose centres of
power at all, but require, instead, the equal sharing of power among all

229
TOWARDS AN INCLUSIVE DEMOCRACY

citizens, that is, true democratic forms of organization and a return to the
classical meaning of politics. Let us therefore examine the form that a
confederal inclusive democracy might take.

A confederal inclusive democracy


The political institutional framework of a confederal democracy has
already been outlined in the work of Murray Bookchin and others, and 12

there is no need therefore to describe it in detail here. Briefly, the basic


unit of decision-making in a confederal democracy is the community
assembly, which delegates power to community courts, community mili-
tias, etc. Still, a lot of important decisions have to be taken at the regional
or confederal level by delegates from the community assemblies. Murray
Bookchin's description of the role of the regional and confederal councils
is very clear:

What then is confederalism? It is above all a network of administrative


councils whose members or delegates are elected from popular face-to-face
democratic assemblies in the various villages, towns and even neighbourhoods
of large cities. The members of these confederal councils are strictly mandated,
recallable, and responsible to the assemblies that choose them for the purpose
of co-ordinating and administering the policies formulated by the assemblies
themselves. Their function is thus a purely administrative and practical one,
not a policy-making one like the function of representatives in republican
systems of government ' 13

The first issue that arises with respect to a confederal democracy is


whether, given the size of modern societies, direct democracy is feasible
today. A related issue is how the regional and confederal councils can be
prevented from developing into new power structures that will start
'representing' community assemblies. As regards the question of feasibility
in general, as Mogens Herman Hansen points out, summarizing the results
of recent research on the topic, 'modern technology has made a return to
direct democracy quite feasible - whether desirable or not is another
matter'. Also, as regards the related issue of how the degeneration of
14

confederal councils into new power structures may be avoided, modern


technology may, again, play a significant role. An electronic network
could connect the community assemblies at the regional or confederal
level, forming a huge 'assembly's assembly'. This way, the confining of the
members of the regional or confederal councils to purely administrative
duties of co-ordination and execution of the policies adopted by commu-
nity assemblies is made even easier. Furthermore, at the institutional
15

level, various safety valves may be introduced into the system that will

230
A CONFEDERAL INCLUSIVE DEMOCRACY

secure the effective functioning of democracy. However, in the last


instance, it is paedeia that may effectively condition democratic practice.
Another common objection against the democratic decision-taking
process is that it may easily lead to the 'tyranny of the majority', where
various minorities - defined by cultural, racial, or even political, criteria -
are simply oppressed by majorities. Thus, some libertarians declare that
'the majority has no more right to dictate to the minority, even a minority
of one, than the minority to the majority'. Others stress that 'democratic
16

rule is still a rule . . . it still inherently involves the repression of the wills of
some people'. 17

I think that there are two issues here that have to be examined
separately. First, the question whether democracy is still a 'rule', and
second, how minorities, even of one, may be protected. As regards the
first issue, it is obvious that those assuming, erroneously as we have seen in
Chapter 5, that democracy involves a form of 'rule', confuse non-statist
democracy with statist forms of it. The fact, which is simply ignored by
libertarians adopting this sort of objection against democracy, is that in a
non-statist conception of democracy there is no conflict between democ-
racy and freedom of the social individual, since all social individuals equally
share power and may take part in the decision-taking process. Furthermore,
as Bookchin points out, the alternative proposed by them, consensus, is
'the individualistic alternative to democracy' — an alternative which, in
18

fact, assumes away individual diversity that supposedly is oppressed by


democracy!
As regards the second issue, it is true that there is a problem of how
minorities, 'even of one', are protected against majorities and, in parti-
cular, how certain fundamental individual freedoms are safeguarded
against democratically taken decisions by the majority. The historical
answer given to this question by supporters of statist democracy has taken
the form of 'human rights'.
Thus, it was the liberal conception of human rights that was developed
first by liberal philosophers of the seventeenth and eighteenth centuries
(John Locke, Montesquieu, Voltaire, Rousseau) and the associated Eng-
lish, French and American revolutions. Liberal individualism and the
economic doctrine of laissez-faire constitute the pillars on which these
rights are based. Furthermore, in consistency with the liberal conception
of freedom, which is defined negatively as the absence of constraints on
human activity, these rights are, also, defined in a negative way as 'freedom
from', their explicit objective being to limit state power.
Then, it was the turn of the 'second generation' of human rights (social
and economic rights), which originated in the socialist tradition, namely
the socialist thinkers and the mass movements and revolts of the nineteenth

231
TOWARDS AN INCLUSIVE DEMOCRACY

and twentieth centuries. The starting point here was the realization that
the liberal conception involved a complete abstraction of individual
freedoms from their socio-economic base, i.e. it ignored the power
conferred by economic status. 'Equal right', according to Marx, 'is still a
bourgeois right', in the sense that it presupposes inequality. 'It is therefore
a right of inequality, in its content, like every right.' In consistency with
19

the socialist conception of freedom, which is defined positively, the socio-


economic rights in this category are, also, defined positively; their aim is
social equality, mainly in the form of an equitable participation in the
production and distribution of the social product, achieved through state
intervention. These rights are therefore 'collective' in the sense that they
belong more to communities or whole societies rather than to individuals
(right to work, paid leave, social security, education, etc.).
Both the liberal and the socialist conceptions involve a view which sees
political and socio-economic rights as somehow separate from each other,
a view that, as a Green activist put it, is a by-product of a conception that
sees social existence as being truncated into separate — political and
economic — spheres and which is incapable of perceiving that 'notions such
as group, feelings, relationships, sense, nature, culture - all that is un-
definable, unquantifiable, sensual, but yet innately human' — could only be
realized within a holistic view of human rights. 20

However, a more fundamental characteristic that both the liberal and


socialist conceptions of rights share is that they presuppose a statist form of
democracy. Human rights are mosdy rights against the state; it is only in
forms of social organization where political and economic power is
concentrated in the hands of elites that many 'rights' are invested with any
meaning, whereas in a non-statist type of democracy, which by definition
involves the equal sharing of power, these rights become meaningless.
This is, for instance, the view adopted by Karl Hess when he states that
'Rights are power, the power of someone or some group over someone
else . . . rights are derived from institutions of power.' 21

In principle, therefore, the issue of human rights should not arise at all in
the case of a non-statist democracy as we defined it. Still, even in an
inclusive democracy, the question remains of how best to protect the
freedom of the single individual from the collective decisions of the
assemblies. Classical anarchists like Proudhon and Kropotkin, as well as
modern ones like Karl Hess, look to contracts in the form of voluntary
agreements to regulate affairs between people in a non-statist society.
However, to my mind, the issue of protecting individual freedoms against
majority decisions cannot just be left to voluntary agreements, which
could be easily broken. This is a very important issue that should be
decided democratically like all other important issues. If a consensus

232
A CONFEDERAL INCLUSIVE DEMOCRACY

requirement in establishing (or in annulling) such freedoms may be


impractical or even morally wrong, this should not mean that such an
important issue just could be left to be decided by the simple majority of a
local or regional assembly. This is therefore perhaps an area where
decisions have to be taken by confederal assemblies with the requirement
of exceptional quorum and majorities.
However, democracy requires a significant degree of cultural homo-
geneity for it to be tolerable. Cultural divisions may create resentment
against majority rule or intolerance with respect to the rights of minorities.
Therefore, despite the above safeguards, there may still be problems of
oppression of racial or ethnic minorities by majorities. One possible
solution to such problems may be the one suggested by Howard Hawkins
in connection with the US experience:
A municipalist approach, starting from the existing geographical segregation
of people of color by white racism, can advance a program of confederations of
self-governing communities. These self-governing confederations could
develop a measure of mutual aid and self-reliance that could insulate them
somewhat from an intransigent white racist majority . . . At the least, by
entering into the larger society with an independent power base, radicalized
communities of color would confront white communities with a choice between
continuing racism or developing a new relationship of mutual respect and
equality.
22

So, wherever minorities are geographically segregated the above solu-


tion may safeguard their position. But, in case such geographical segrega-
tion is non-existent, perhaps, different institutional arrangements should
be introduced, creating separate minority assemblies within the confedera-
tion, or perhaps giving minorities a veto 'block' vote.
Of course, institutional arrangements create only the preconditions for
freedom. In the last instance, individual and collective autonomy depends
on the internalization of democratic values by each citizen. Therefore,
paedeia plays, again, a crucial role in this connection. It is paedeia, together
with the high level of civic consciousness that participation in a democratic
society is expected to create, which will decisively help in the establish-
ment of a new moral code determining human behaviour in a democratic
society. I suppose it will not be difficult to show that the moral values
which are consistent with individual and collective autonomy and living in
a community-based society are those that are based on co-operation,
mutual aid and solidarity. The adoption of such moral values will therefore
be a conscious choice by autonomous individuals living in a community,
as a result of the fundamental choice for autonomy, and not as the outcome
of some divine, natural or social 'laws', or tendencies.

233
TOWARDS AN INCLUSIVE DEMOCRACY

Criticisms raised against the confederal democracy


It is precisely because the confederal democracy offers, perhaps, the only
realistic way out of the multidimensional crisis, and, at the same time,
represents a form of social organization that meets the institutional condi-
tions for individual and social autonomy, that it is today under attack from
statists of every persuasion and, paradoxically (prima facie), by some
libertarians as well. As regards the former, it is not surprising that civil
societarians, like Andre Gorz, are today attacking the community-based
society. However, what is surprising is that one of the main arguments he
uses against this type of society is that it will necessarily be in opposition to
individual autonomy, presumably because it will represent another system,
whereas the objective should be to abolish everything that makes society a
system. In the process, however, Gorz makes clear that he takes for
23

granted the system of market economy and the state, insisting that 'The
socialist aim should not be to eliminate the system or the sphere of
heteronomy, but to restrict it where it cannot be dispensed with.' 24

A common objection raised against a community-based democracy is


that the 'complexity' and the size of today's societies make such a society
a utopian dream. Thus, Andre Gorz, again, argues that a community-based
society is impossible because it implies the 'radical ehmination' of in-
dustrial techniques, of specialized functions and of the division of
labour:
It is obvious and generally accepted that a complex society cannot exist
without commodity relations and markets. The total elimination of commod-
ity relations would presuppose the abolition of the social division of labour
and specialization and the return to autarchic communities or to a kibbutz
type of society. . . . The state should undertake defence and the general
interest, including the existence of a market system.
25

However, a confederal democracy presupposes nothing of the sort. Not


only is modern technology perfectly compatible with such a society, as
Murray Bookchin has shown, but also the talk about a return to autarchic
26

communities or to a kibbutz-type of society represents a total misconcep-


tion of the proposals concerning the economic organization of such a
society. As I will attempt to show in the next section, a confederal
democracy could function on the basis of a mix of democratic planning
and an artificial 'market', involving the use of personal vouchers issued to
each citizen. A system like the proposed one neither rules out special-
ization and the division of labour, nor depends on a system of autarchic
communities — a system which, today, is not feasible anyway. What the
proposed system does rule out is the market economy and the state,

234
A CONFEDERAL INCLUSIVE DEMOCRACY

institutions that the 'radical' thought of thinkers like Andre Gorz cannot
do without!
Still, all this is conveniently ignored by Gorz, in his effort to support the
development of a post-industrial society, in which capitalism would
transcend itself (a transcending which, the author insists, must not be
27

confused with the abolition of capital ) through the self-organization of


28

individuals into 'countervailing powers'. Thus, Gorz, obviously totally


29

blind to the historical dynamics and the logic of the market economy,
which have led to the present neoliberal internationalized economy and
the minimization of social controls on the markets, describes as utopian the
proposal for a community-based society, whereas at the same time he
advocates the creation of a 'European eco-social space . . . in which
commercial competition and commodity rationality can be subjected to
restrictive rules'! 30

Finally, John Clark, an ex-social ecologist, recendy attacked 31

community-based democracy in order to promote an alternative individu-


alistic and spiritualist view - one that, in effect, involves no conception of
democracy at all. In what he calls the 'eco-communitarian' approach John
Clark seems to dissolve uniquely human communities in a hazy, often
metaphorical 'Earth community', reminiscent of the pantheistic ideas
advanced by the Catholic deep-ecology priest, Thomas Berry. 32

The first step Clark takes in attacking any objective goal of democracy
is to efface the very subject of a democratic life, namely the citizen, who,
as Murray Bookchin observes, 'embodies the classical ideal of philia,
autonomy, rationality and, above all, civic commitment'. Clark erodes
33

the very concept of the citizen by converting it into a purely subjective,


indeed idealistic, being — a 'citizen' of an ecosystem, of a bio-region, in fact
of the 'Earth' itself! In addition, as if this etherealization of citizenship
were not enough, Clark has no difficulty with invoking an asocial,
apolitical and basically abstract 'person', so characteristic of the persona-
listic age in which we live today. In his view the concept of citizenship is
limited and implicitly preserves the idea of a particularistic interest, as
citizens will be guided by the interests and needs of their own communities
against those of other communities.
However, although it is true that the citizenry in a specific community
may hold views that differ from those in other communities (indeed, even
within the same community itself), still, the exact aim of a confederal
democracy is to provide an institutional framework for the democratic
resolution of such differences. Clark's endeavour to resolve the problem of
differences between or within communities treads the well-worn path of
a largely mystical idealism. Presumably, everything will be resolved, in
Clark's view, if we create a virtually metaphorical condition called 'Earth

235
TOWARDS AN INCLUSIVE DEMOCRACY

citizenship' that will somehow solidarize us with each other and with all
forms of life. Or, as Clark puts it: 'We need a spiritual revolution more
than a political platform and a regenerated community more than a
political movement.' Clearly, Clark totally ignores the institutional
34

conditions, in terms of the equal sharing of political and economic power


among all citizens and the resulting abolition of hierarchical domination
and class exploitation, which, however, are vital in fostering the very
'spiritual revolution' and 'regenerated community' he calls for. It is
obvious that a spiritual revolution, by itself, will never lead to a radical
transformation of society.
The next step in Clark's attack against the goal of democracy is to
denigrate the idea of the popular assembly, which is a crucial democratic
institution. Thus, the 'affinity group', the familial group and some sort of
community living are simplistically counterpoised to and even privileged
over popular assemblies, which, supposedly, may very well lead to failure,
unless the appropriate 'cultural and psychological preconditions' have
been developed. In fact, he specifically refers to cases where 'power to the
popular assemblies' could easily lead to harsh anti-immigrant regulations,
capital punishment and, who knows, torture and similar practices.
But, as regards, first, the 'affinity group', which today is appropriated by
many New Agers and is even promoted as a useful organizational form for
'forward-looking' corporations, it should be noted that it was created by
the Iberian Anarchist Federation (FAI) as an organizational unit, often for
'action' purposes such as 'expropriations, and not as an institution for a
future anarchist society'. Second, Clark's conclusions can be applied just
35

as easily to his own 'cultural and psychological preconditions', which, in


many respects, have unsettling affinities with current eco-fascist notions
that subordinate the individual to a chthonic 'Mother Earth', and 'bio-
regional' beliefs in the redeeming virtues of the soil. Third, it is obvious
that Clark does not seem to realize that problems like the explosion of
crime, poverty, and illegal immigration have their objective roots in
present-day inequities in the distribution of economic and political power
and that therefore once these inequities are abolished in an inclusive
democracy the corresponding problems are expected to be phased out.
It therefore seems that the main reason why John Clark de-emphasizes
— if not completely dismisses — popular assemblies is that he has no
conception of democracy as a constellation of institutions (i.e. the struc-
tures and processes which, at the institutional level, secure the equal
sharing of power), as well as of values. Hence, forms of collective decision-
making are simply irrelevant in Clark's treatment of democracy — to the
extent that he deals with them at all. Indeed, democracy, in Clark's view,
236
A CONFEDERAL INCLUSIVE DEMOCRACY

essentially becomes a system of values, a mere state of mind, where, as he


puts it, every action in every sphere of life is a kind of legislating.
But, not only does John Clark's eco-communitarian view lack any
conception of political democracy, it is, also, woefully lacking in any
conception of economic democracy. Thus, Clark allows not only for
privately owned enterprises (small partnerships, individual producers,
etc.), but even a market economy! Still, this does not prevent him from
envisaging an economy where a co-operative sector would dominate the
private sector - all this under conditions of a market economy which
inevitably (as we have seen in Chapter 2) must lead, in the course of
competition, to the concentration of capital and formation of modern
corporate conglomerates. It is clear that not only does Clark lack any
knowledge of the dynamics of a market economy, but he also ignores the
past two centuries of economic concentration in which co-operative and
similar experiments were marginalized or simply swept into the dustbin of
history.
The bio-regionalist approach adopted by eco-communitarians like
Clark has no relation to democracy and is easily compatible with any type
of socio-economic system, even an eco-fascist one of the 'Green Adolf
variety. Ecological values, divested of a democratic context, can easily be
used to undermine any serious attempt to offer a liberatory alternative to
the present society, or be twisted freely into forms that lend themselves to
very authoritarian ends. The establishment of various co-operative en-
deavours may be useful for cultural and experimental ends, but taken by
themselves, they are grossly inadequate for transforming society, as history,
and even recent efforts such as the increasingly hierarchical Mondragon
experiment, have shown (see Chapter 7). More often than not, such
endeavours, at most, simply provide the system of the market economy
with the facade of a benign and presumably humane image, if they do not
degenerate into crassly capitalistic enterprises in their own right.

The preconditions of economic democracy


This section examines the preconditions of economic democracy in an
attempt to outline the economic model on which an inclusive democracy
may be founded. The dominant characteristic of this model, which
differentiates it from similar models of centralized or decentralized plan-
ning, is that, although it does not depend on the prior abolition of scarcity,
it does secure the satisfaction of basic needs, without sacrificing freedom of
choice, in a stateless, moneyless and marketless economy.
Clearly, the type of economic democracy proposed here does not
assume what Arendt calls the 'communistic fiction' that there is one
interest in society as a whole. Such an assumption (which implies that the

237
TOWARDS AN INCLUSIVE DEMOCRACY

'invisible hand' in a market economy - or, alternatively, the planning


process in a state socialist economy — would satisfy the general interest)
abstracts from the essential fact that social activity is the result of the
intentions of numerous individuals. What I propose, instead, is explicitly
36

to assume the diversity of individuals (which, in turn, implies that con-


sensus is impossible) and to institutionalize this diversity through the
adoption of a combination of democratic planning procedures on the one
hand and voucher schemes within an artificial 'market' on the other. The
aim is to secure an allocation of resources that ensures both freedom of
individual choice and the satisfaction of the basic needs of all citizens.
Also, the proposed economic democracy assumes away the mythical
stage of free communism and addresses the issue of how, within the
context of a scarcity society, i.e. a society where resources are still scarce with
respect to needs, a method of resource allocation might be found which
ensures that the above aim is achievable. From this viewpoint, it is not
accidental that some modern libertarians who support the 'politics of
individualism' find it necessary, in order to attack democracy, to resort, on
the one hand, to the myth of free communism and, on the other, to the
distortion that democracy involves a kind of 'rule' in the form of majority
rule. The intention is clear: the former makes economic democracy
superfluous, whereas the latter makes direct democracy undesirable.
L. Susan Brown, for instance, starting from the anarcho-communist slogan
'from each according to ability, to each according to need', agrees with
Goldman that 'It is up to individuals to decide, voluntarily, how best to
live and work together. It is not something imposed on them from above,
or dictated by the majority but rather individuals themselves freely and
voluntarily create and recreate the social and economic forms of organiza-
tion that they desire.' However, as it will be shown below, economic
37

democracy and freedom of choice are not as incompatible as this statement


seems to imply.

Economic democracy defined


The usual definitions given to economic democracy by liberals, socialists
and Green economists can be shown to be either inadequate or particular or
both, and sometimes they tend to emphasize only one of the two main
aspects of economic power: ownership and control.
Neoliberals, for instance, identify economic democracy with 'popular
capitalism', which, however, can secure neither democratic ownership
nor control. Thus, as the Thatcherite experiment of popular capitalism has
shown, a wider spreading in the ownership of shares does not imply a
smaller concentration of ownership and economic power. Furthermore,
the spreading of shares is not, by itself, related to a higher degree of

238
A CONFEDERAL INCLUSIVE DEMOCRACY

democratic control since the crucial economic decisions are still taken by
managers and technocrats on the basis of profit-making considerations.
The practice of socialist statism tended to identify economic democracy
with the narrow sense we defined in the previous chapter, namely, as a
system that institutionalizes the minimization of socio-economic differ-
ences which, according to Marxist theory, were due, 'in the last instance',
to the unequal distribution of private property. This implied that the state
should be involved in either a process of redistributing income through
taxation and the welfare system (social democracy) or in a process of
abolition of private ownership of the means of production (actually
existing socialism). However, as private ownership of the means of
production is only one aspect of economic power, the attempt to mini-
mize the effects of its unequal distribution on income, or even the
abolition of private ownership of the means of production, could not
secure, by itself, the elimination of economic power relations. So, the
outcome was that the economic power of the capitalist elite controlling the
private sector in capitalist economic 'democracy' was simply replaced by the
economic power of the party elite controlling the state sector in socialist
economic 'democracy'.
Today, after the collapse of 'actually existing socialism', most self-styled
'socialists' have abandoned any vision for a marketless, stateless, non-
capitalist society and identify economic democracy with the enhancement
of 'civil society' within the context of what they call a 'radical' democracy.
Furthermore, they do not propose any dialectical tension between the
nation-state and civil society. The enhancement of the latter has nothing
to do anymore with the process of withering away of the former, but it
solely aims to counterbalance or just check the state's power, within a
market economy system. In other words, the vision of a socialist planned
economy, to emerge after a transition period, has simply been abandoned
by most 'socialists' today.38

Finally, some Green economists identify economic democracy with


various forms of 'employee ownership' and 'workplace democracy'. 39

However, even when such forms of economic organization presuppose


democratic control/ownership, control is narrowly defined to cover only
workers and employees and not society at large. Combined with the fact
that in this type of economic democracy it is still the market that ultimately
determines what is to be produced and how, this could imply that what is
involved is not a fundamental change in the nature of a competitive
system. In other words, despite the anti-growth rhetoric of mainstream
Green economists, as long as they take for granted the system of the market
economy and its 'grow-or-die' dynamic, they indirectly adopt the growth
economy itself. Such proposals, therefore, do not imply the abolition of

239
TOWARDS AN INCLUSIVE DEMOCRACY

economic power but simply its further decentralization, while, at the same
time, they cannot secure (similarly to the liberal and socialist versions of
economic democracy) the pursuit of the general interest. It is therefore
obvious that we need a definition of economic democracy which involves
the abolition of economic power itself.
A perhaps useful way to define economic democracy, in a way that
implies the abolition of economic power relations, would be to start with
the definition of direct democracy. We may simply define direct (or
political) democracy as the form of political organization which, through
direct citizen participation in the political decision-taking and decision-
implementing process, secures an equal distribution of political power
among citizens. This definition of democracy explicitly involves the
negation of political power, and it implies the authority of the people in
the political sphere. Correspondingly, we might define economic democ-
racy as an economic structure and a process which, through direct citizen
participation in the economic decision-taking and decision-implementing
process, secures an equal distribution of economic power among citizens.
As with the case of direct democracy, economic democracy today is only
feasible at the level of the confederated communities. In other words, it
involves the demotic ownership of the economy (i.e. the means of produc-
tion belong to each demos), something radically different from both the
two main forms of concentration of economic power (capitalist and
'socialist' growth economy), as well as from the various types of collectivist
capitalism, either of the 'workers' control' type, or of the milder versions
that social democrats of the post-Keynesian variety suggest. 40

Thus, demotic ownership of the economy provides the economic


structure for democratic ownership, whereas direct citizen participation in
economic decisions provides the framework for a comprehensively demo-
cratic control process of the economy. The community, therefore, becomes
the authentic unit of economic life, since economic democracy is not
feasible today unless both the ownership and control of productive
resources are organized at the level of the confederated communities. In
fact, the community concept itself implies the negation of economic
power. So, unlike the other definitions of economic democracy, the
41

definition given here involves the explicit negation of economic power


and implies the authority of the people in the economic sphere. In this
sense, economic democracy is the counterpart, as well as the foundation,
of direct democracy.
However, given today's high degree of concentration of economic
power and international interdependence, it is difficult even to imagine a
radically different form of society based on economic democracy. Is such
a society feasible today? What should be the system of allocation of

240
A CONFEDERAL INCLUSIVE DEMOCRACY

resources that would be compatible with economic democracy? The


magnitude of the questions asked obviously implies the need for significant
collective research work. Here, we can only make some tentative pro-
posals about the general guidelines that could be used in such an under-
taking. Of course, theory can only explore possibilities, and it is up to
social 'praxis' to give concrete content to the new form of social organiza-
tion. In what follows an attempt is made to put forward a new vision of
economic democracy, as well as some concrete proposals about how such
a democratic model of the economy could function. In this double sense,
the approach proposed here represents an original community-oriented
model of the economy.
We may identify three preconditions that must be satisfied for economic
democracy to be feasible:

(a) community self-reliance;


(b) demotic ownership of productive resources; and
(c) confederal allocation of resources.

The preconditions of economic democracy: community


self-reliance
Self-reliance is meant here in terms of autonomy, rather than in terms of
self-sufficiency, which, under today's conditions, is neither feasible nor
desirable. A useful definition of self-reliance is the one given by the 1974
Cocoyoc Declaration of non-aligned countries as 'reliance primarily on
one's own resources, human and natural, and the capacity of autonomous
goal-setting and decision-making'. Thus, although self-reliance implies
42

maximal utilization of local resources and sources of energy, it should not


be confused with autarchy and should always be seen within the context of
confederalism. As the direct democratic control of the economy and
society is only possible today at the level of the confederated communities,
it is obvious that community self-reliance is a necessary condition for
political and economic autonomy.
However, it is not only the demand for autonomy that necessitates self-
reliance, so that control over one's own affairs can be restored. Self-
reliance also becomes necessary by the fact that the historical trend away
from self-reliance has had important adverse implications at the macro-
economic, the cultural, the environmental and the social levels.
At the macro-economic level, millions of people all over the world have
been condemned by the market forces (that ultimately control their fate
once they have moved away from self-reliance) to unemployment, pov-
erty and even starvation. Today, local economies depend on outside
centres for the organization of production and work, for covering their

241
TOWARDS AN INCLUSIVE DEMOCRACY

needs in goods and services, even for the provision of social services
(education, health, etc.). For example, to attract investors, very expensive
incentives are used which usually overlook the ecological implications,
while the investments themselves do not maximize local employment and
create a significant outflow of local income. The latest GATT agreement,
for instance, which since January 1995 converted GATT into the World
Trade Organization, would make self-reliance in agriculture almost
impossible, destroying in the process the livelihood of millions of farmers
all over the world and transforming agriculture into an even more
chemical-intensive process controlled by big agro-business. On the con-
trary, local self-reliance implies maximal utilization of local resources and
sources of energy, a process that leads to a corresponding maximization of
local employment and, through the 'multiplier effects', of local income.
Also, at the cultural level, the shift away from self-reliance has led to the
dismantling of the social ties and values that unite communities, or even
whole cultures. The market values of competitiveness and individualism
have replaced the community values of solidarity and co-operation, trans-
forming human beings into passive citizens and consumers.
At the environmental level, the trend away from self-reliance has led to
the irrationality of a system that has to rely, for its everyday functioning, on
the transport of goods and people over huge distances, with all the
implications for the environment that this massive movement implies. It 43

should therefore be stressed that self-reliance is a necessary condition


(though, of course, not a sufficient one as well) for the creation of an
ecologically sustainable world order. This is so because self-reliant com-
munities constitute today the only way to reverse the process of over-
production and overconsumption that is the main effect of the 'growth
economy' as well as the main cause of the ecological threat.
Finally, the trend away from self-reliance has also been associated with
significant socio-economic costs that have been particularly emphasized
lately by Green economists. Thus, de-skilling, vulnerability and eco-
44

nomic dependence are the respective costs of the division of labour,


specialization and free trade. In other words, the trend away from self-
reliance implies a radical shift away from individual and social autonomy.
So, the pre-'market economy' hierarchical social structures, which were,
mainly, based on non-economic factors, were simply replaced in the
market economy by new hierarchical structures built on economic foun-
dations. It is therefore necessary for these economic foundations to be
eliminated so that domination of human by human can be abolished.
Economic democracy is therefore impossible without a radical de-
centralization of economic power so that self-reliance becomes feasible.
However, a radical decentralization implies, in fact, that the type of

242
A CONFEDERAL INCLUSIVE DEMOCRACY

development which historically has identified Progress with economic


growth and efficiency has to be abandoned. The trend away from local
economic self-reliance was, in fact, an inevitable by-product of the rise of
the market economy. In other words, the features associated with this
trend (division of labour, specialization, exploitation of comparative ad-
vantage through free trade) followed inevitably from the expansionary
nature of the system of the market economy and its grow-or-die dynamic.
Similarly, the Marxist adoption of the capitalist idea of Progress led to the
'socialist' growth economy, where the huge concentration of economic
power in the hands of the bureaucrats controlling central planning de-
stroyed any chance for self-reliance.
Today, a form of decentralization is taking place within the inter-
nationalized market economy, a decentralization which is facilitated by
technological changes. Stages within the production process (for some
products, even the production process itself) that used to take place in
advanced capitalist countries have been moving to the periphery and semi-
periphery (Mexico, Korea, Taiwan, Mediterranean Europe, Thailand,
Malaysia, China, Eastern Europe). Multinational corporations now have
the technological capability to shift parts of productive activity from the
centre to the periphery in order to minimize production costs (including
environmental costs). But the decentralization that takes place within this
process is physical, not economic, since economic power remains at the
metropolitan centres. The very dynamics of the neoliberal phase, which is
a process of liberating markets from the 'constraints' imposed by the state
in the statist phase of marketization, lead to further concentration of
economic power at the metropolitan centres, as was shown in the first part
of this book. I will therefore call this process dependent decentralization
because it does not lead to the creation of self-reliant communities but is
instead an integral part of today's process of concentration of economic
power in the metropolitan centres and of some parallel decentralization of
production on a global scale. Therefore, this process implies a reproduc-
43

tion of the hierarchical division of labour and the dominance/dependence


relations.
A clear example of dependent decentralization is the 'principle of
subsidiarity' that is being presently introduced in the European Union to
calm the fears of the European peoples, who see even their present
minimal capability for self-determination being usurped. This principle,
which requires decisions to be taken at the lowest possible level, refers
mainly to the decentralization of political decisions, whereas the main
economic decisions are left to be taken at the centre, by the political and
technocratic elite, through the institutions of the Economic and Monetary
Union that are being established. Therefore, the European Union's

243
TOWARDS AN INCLUSIVE DEMOCRACY

decentralization not only does not reduce the dependence of its periphery
on the centre but in fact enhances it. The metropolitan areas determine the
quantity and content of development of the peripheral areas not only at the
micro-economic but also at the macro-economic level: at the micro level,
because it is from the metropolitan areas that the multinational capital,
needed for the development of the periphery, originates; and at the macro
level, because the economically stronger areas are able, through the
European Union institutions, to impose directly their will on the weaker
ones.
Opposed to this type of decentralization is a self-reliant decentralization
which can only be founded on the horizontal interdependence of eco-
nomically self-reliant communities. The economic relations between the
confederated communities should therefore be structured in a way to
enhance mutual self-reliance, in the context of collective support, rather
than domination and dependency, as today. This could only be achieved
within the framework of a confederal democratic planning process. Self-
reliance within this framework should imply that the basic needs, demo-
cratically defined, should, as far as possible, be covered at the community
level, although the level of satisfication of these needs should be same
across the confederation (see p. 255). Therefore, exchanges between
communities in a confederation are both necessary and desirable, given
that self-reliance can never lead to the satisfaction of all needs. The real
issue is who controls such exchanges: is it the community itself, as for
instance happened in the free medieval cities, or the 'market', namely,
46

those who because of their economic power are in a position to control the
market, i.e. the economic elite.
An important question that has to be asked with respect to self-reliance
is the size of the economic unit (i.e. the size of the community), which, on
the one hand, makes self-reliance viable and, on the other, is compatible
with direct and economic democracy. As regards economic viability, no
general a priori answer can be given, in view of the significance of such
factors as the access to raw materials, climate, geography and others.
However, it is indicative that, at the beginning of the 1990s, 70 per cent of
the countries with less than 100,000 in population belonged to the group
of countries classified by the World Bank as 'high-income' or 'upper-
middle income'. It illustrates the fact that economic viability is not
47

determined exclusively or even decisively by size, provided, of course, that


it exceeds a certain minimum (say, 30,000) that would allow the local
satisfaction of many, if not most, basic needs.
It is therefore compatibility with direct and economic democracy, that
is, the feasibility of decision-taking in face-to-face assemblies, that should
be the basic determinant of the size of the self-reliant community. On

244
A CONFEDERAL INCLUSIVE DEMOCRACY

these grounds, the municipality (the demos) emerges as the most appro-
priate economic unit that could constitute the nucleus of an inclusive
democracy. However, given the huge size of many modern cities, this
implies that many of them will have to be broken up for this purpose. Still,
this does not require their immediate physical decentralization, which is
obviously a long-term project, but only their institutional decentralization,
which could be introduced immediately.

The preconditions of economic democracy: demotic


ownership of productive resources
The question of ownership refers to who owns and controls the pro-
ductive resources and should not be confused with the issue of allocation
of resources, which refers to the mechanism through which the basic
questions of what, how and for whom to produce are answered. The two
modern forms of ownership of productive resources are the capitalist and
the socialist ones, whereas the two main forms of allocation of resources
are the market and the planning mechanisms. Historical experience has
provided us with all sorts of combinations between systems of ownership/
control and allocation of resources, from state-owned firms within a
market economy system to capitalist firms within a planned economy.
By the same token, the question of ownership should not be confused
with the question of control. I do not just refer to the usual argument
about the divorce of ownership from control in today's giant stock
companies, where shareholders are the owners but actual control is
exercised by managers and technocrats. In fact, the famous 'divorce' is in
this case meaningless since shareholders and managers/technocrats in a
sense — the most important one from our viewpoint — share common
motives: to make profits and to reproduce the hierarchy relations that
exclude most of the employees from effective decision-taking. I also refer
here to the case where a firm may be owned by its employees and still be
managed and effectively controlled by technocrats, managers and others
(e.g. the Mondragon type of workers' co-op). In that case, potentially,
48

there may be a real divorce of interest between those who own the firm
(workers) and those who control it (managers, etc.) since, even if profita-
bility is a common aim, hierarchy may not be. This conflict of interest is
illustrated by the fact that, as even supporters of workers' co-ops admit,
'many co-operatives have indeed suffered from mismanagement, primarily
due to a lack of discipline with respect to shopfloor workers ignoring
management orders'. 49

The capitalist system of ownership implies private ownership of pro-


ductive resources and is usually associated with a market system of
allocating them among various uses. Private ownership of productive

245
TOWARDS AN INCLUSIVE DEMOCRACY

resources irrespective of whether it is combined with a market system or


not, implies control to serve particular interests (of shareholders, managers
or workers) rather than the general interest. Furthermore, when private
ownership of productive resources is combined with a market allocation of
resources, (the system of the market economy) it implies inequality,
concentration of political/economic power, unemployment and malde-
velopment or 'inappropriate' development. The grow-or-die dynamic
50

that inevitably develops in such a system leads to systematic efforts to


conquer nature and, consequendy, to ecological damage. Therefore, this
system is clearly incompatible with an inclusive democracy.
On the other hand, the socialist system of ownership implies a 'social
ownership' of the means of production, which can exist within either the
market or the planning system. This historically has taken two main
forms:
(a) nationalized enterprises; and
(b) collectivized self-managed enterprises.
In nationalized enterprises, a real divorce between ownership and control
is introduced: whereas formal ownership belongs to society at large,
effective control of production is left to either technocratic elites (in a
market economy system) or to bureaucratic elites (in a planned system)
which take all important economic decisions. That implies that in this
form of organization, the pursuit of particular interests is achieved not
through ownership but through control. This is true whether such
enterprises function within a market economy system (in which case they
usually do not differ from normal capitalist firms, regarding the real
objectives pursued) or within a 'socialist' planned system (in which case
they are controlled by the party elite, through its control of the state
apparatus, within the context of a bureaucratic top-down control). It is
therefore obvious that nationalized enterprises are incompatible with
economic democracy.
In collectivized self-managed enterprises, the ownership belongs, wholly or
partially, to the workers/employees of the enterprise. Historically, we
meet self-managed enterprises both within a market economy system (e.g.
the Mondragon co-ops) and within a 'socialist' planned economy (e.g. the
Yugoslav self-managed enterprises). The main problem with such self-
managed enterprises is that the more independent of each other and of
society at large they are, the more they tend to satisfy the particular interest
of their employees, as against the general interest of citizens in the
community. Also, to survive in a competitive world, they usually have to
use the same production methods as capitalist firms (methods which may
be alienating, damaging to the environment, labour saving, etc.). Further-

246
A CONFEDERAL INCLUSIVE DEMOCRACY

more, collectivized self-managed enterprises tend to compete with each


other for productive resources (natural, labour, etc.) in a way very similar
to the competition among capitalist firms. Finally, such forms of self-
management cannot secure the autonomy of the worker as citizen. Thus,
although some forms of it, supported by syndicalists and parts of the Green
movement, may promote democratic procedures within the enterprise
(what we defined as 'democracy in the social realm'), they do nothing to
promote democracy in general, for the community as a whole. So, these
forms of self-management, as Bookchin observes, usually represent 'ex-
ploitative production with the complicity of the workers' since they
51

cannot guarantee freedom from the tyranny of the factory and rationalized
labour. Therefore, collectivized self-managed enterprises are, also, in-
compatible with an inclusive democracy in general and an economic
democracy in particular.
It is therefore obvious that economic democracy requires another type
of social ownership which secures a democratic ownership and control of
productive resources and that the only form of ownership which can
guarantee it is demotic (community) ownership. This type of ownership
leads to the politicization of the economy, the real synthesis of economy
and polity - a synthesis, which can only be achieved within the institu-
tional framework of an inclusive democracy. This framework, by defini-
tion, excludes any divorce of ownership from control and secures the
pursuit of the general interest. This is so because, as shown below,
economic decision-making is carried out by the entire community,
through the citizens' assemblies, where people take the fundamental
macro-economic decisions which affect all the community, as citizens,
rather than as vocationally oriented groups (workers, technicians, engi-
neers, farmers, etc.). At the same time, people at the workplace, apart from
participating in the community decisions about the overall planning
targets, would also participate as workers (in the above broad sense of
vocationally oriented groups) in their respective workplace assemblies, in
a process of modifying/implementing the Democratic Plan and in running
their own workplace.
Thus, the democratic planning process would be a process of con-
tinuous information feedback from community assemblies to workplace
assemblies and back again. Finally, the running of the demotic enterprise
could be supervised by a kind of supervisory board appointed by the
workplace assembly. This supervisory board should include personnel
with specialist knowledge and its members would be constantly recallable
by the workplace assembly, apart from being indirectly controlled by the
citizens' assemblies. Thus, workplace assemblies would function both as
247
TOWARDS AN INCLUSIVE DEMOCRACY

institutions of 'democracy in the social realm' and as fundamental compo-


nents of economic democracy, given their role in the process of demo-
cratic planning. As such, workplace assemblies, together with community
assemblies, constitute the core of the inclusive democracy.

The preconditions of economic democracy: confederal


allocation of resources
Although self-reliance implies that many decisions can be taken at the
community level, still a lot remains to be resolved at the regional/national/
supra-national level. To mention just a few of the problems that cannot be
solved at the community level:
• problems generated by the unequal distribution of energy supplies,
natural resources and the consequent unequal distribution of income
between the confederated communities;
• problems generated by exchanges of goods and services between indivi-
dual citizens of different communities or between the confederated
communities themselves;
• problems generated by the supra-local character of the environmental
implications of production and consumption;
• problems of transportation/communication;
• problems generated by the free mobility of labour between commu-
nities; and
• problems of technology transfer.
Apart, however, from the problems of co-ordination, there is the
problem of the mechanism that would secure a fair and efficient allocation
of resources both within the community and between communities. The
problem is particularly crucial today as it has become obvious that both
mechanisms that were developed historically to deal with this problem,
that is, the market mechanism and central planning, have failed
miserably.

The market mechanism


The market is an automatic mechanism within which Adam Smith's
invisible hand allocates resources in a supposedly rational way. As liberal
economists hypothesize, the free combination of individual rational
decisions leads to a socially rational allocation. It is further hypothesized
that the market mechanism is the most economical information system
which provides the correct incentives that can secure an efficient decentral-
ization of resources. The implication of all these hypotheses is that the
market mechanism is the best system to guarantee a rational allocation of
resources, without compromising the autonomy of each individual.

248
A CONFEDERAL INCLUSIVE DEMOCRACY

However, all these hypotheses are valid only under certain very strict
assumptions. As a result, the properties of the market that supposedly result
in a rational allocation are usually lost once the mythical state of equilibrium
is disturbed. Today, even one of the pioneers of general equilibrium
theory, the Nobel-prize winner Kenneth Arrow, admits defeat in his
efforts to develop a theory showing the capability of a market economy to
reach general equilibrium and, after discussing various insoluble technical
problems of the theory, he emphasizes that 'the best-known falsification is
the recurrent and now chronic existence of mass unemployment, which is
a straightforward contradiction of equilibrium'. In other words, as Will
52

Hutton notes: 'The major tenet of free market economics — that un-
regulated markets will of their own accord find unimprovable results for all
participants — is now proved to be nonsense.' And of course, liberal
53

economists, like Keynes, have shown, long ago, that the market is a crisis-
laden system which cannot secure full utilization of resources and
especially of labour. Finally, the inherent tendency of the market economy
to lead to concentration of economic power and inequality that was
examined earlier shows that maldevelopment is the by-product of a crisis-
laden system where only money-backed wants are covered, which do not
necessarily coincide with basic human needs. Therefore, orthodox econo-
mists who take for granted the market economy and its supposed 'super-
iority', in fact, rationalize the inequality, poverty and misery of millions of
people all over the world for the benefit of the privileged minorities to
which they themselves belong.
The freedom of choice that the market economy system supposedly
secures, in reality, means 'rationing by the wallet'. In fact, citizens in a
market economy system are not free to choose either as consumers or as
producers: as consumers, because their choice is constrained by their
income/wealth; as producers, because the 'decisions' about what and how
to produce are taken for them by the market. Furthermore, producers are
crucially constrained by their purchasing power, as their access to pro-
ductive resources and, therefore, their productivity depends on their
financial ability. If, for example, an Indian farmer has a much lower
productivity than an English or American farmer, this is due to the
respective access to fertilizers, machines, etc., as well as to educational
54

and technological differentials, which are also related to income differ-


entials. However, economic development became a function of the
financial ability of producers very recently, that is, when productive
resources became available exclusively through the market. As market
relations penetrated all sectors of human activity and local self-reliance was
destroyed all over the world, any access to productive resources became a
249
TOWARDS AN INCLUSIVE DEMOCRACY

matter of purchasing power. No wonder that today one-fifth of the world


population uses up four-fifths of the world's annual resource output. 55

In a market economy system, therefore, the basic economic decisions


that a society has to take (i.e. what, how and for whom to produce) are
crucially conditioned by the purchasing power of those income groups
that can back their demands with money. A continuous bidding is going
on for goods, services, resources, and those with the biggest purchasing
power are the winners. Thus, the market economy system, contrary to
liberal mythology, is the worst system for allocating resources when
purchasing power is unequally distributed. Under conditions of inequality,
which is of course an inevitable outcome of the dynamic of the market
economy, the fundamental contradiction regarding the market satisfica-
tion of human needs becomes obvious: namely, the contradiction between
the potential satisfaction of the basic needs of the whole population versus
the actual satisfaction of the money-backed wants of part of it. No wonder
that orthodox economists make the convenient assumption of a 'given
distribution of income' when they try to show that the best allocation of
resources is the one achieved through the market economy system! Thus,
the famous analysis of Pareto optimality, which shows the potential of the
market mechanism to secure an optimal allocation of resources, is based on
acceptance of the prevailing income distribution. 56

In today's neoliberal phase of the marketization process, inequality is


growing rapidly both at the country level, between the North and the
South, as well as within them, at the personal level, as we saw in the first
part of this book. Given, therefore, the 'bidding mechanism' of the market
described above, the system increasingly caters to the needs of the 'new'
North. So, it is through inequality that maldevelopment is produced and
reproduced. Furthermore, inequality is a basic cause for the enthusiastic
adoption of the eco-destructive growth objective by the elites all over the
world, since the aim of trickle-down economics is, exactly, to maintain the
social cohesion of a very unequal society through expanding, rather than
re-dividing, the 'pie'.

The central planning mechanism


In contrast to the automatic character of the market, planning is a
consciously controlled mechanism of allocating resources. There are many
varieties of planning both in theory and in historical experience. Excluding
the case of indicative planning, that is, planning within a market economy
system (e.g. post-war French planning) which is basically a form of macro-
economic management in a mixed economy, planning can be either
centralized or decentralized. An extreme form of centralized planning was the
Stalinist model where the Planning Bureau (in other words, the

250
A CONFEDERAL INCLUSIVE DEMOCRACY

bureaucrats/technocrats of the Soviet elite) determined the level of out-


put, its mix, the methods of production to be used, distribution, etc., and
passed on the orders from top to bottom. Centralized planning not only
leads to irrationalities (which had eventually led to its collapse) and is not
effective in covering needs; it is also highly undemocratic. Still, as we saw
in the first part, centralized planning has achieved security of employment
and a better distribution of income (although not a better distribution of
power) than for other countries at a similar level of development.
After the failure of centralized planning became clear, Marxist econo-
mists like Ernest Mandel proposed a form of 'democratically centralized
57

planning' which, in a transitional phase, combines workers' self-


management and the state, until the latter eventually — in classical Marxist
fashion — withers away. However, this form of planning still suffers from
the problem that it ignores the dialectic of statism. In other words, it
ignores the fact that the bureaucrats who control the state apparatus
cannot be prevented, within such an institutional framework, from
institutionalizing, formally or informally, significant privileges for them-
selves, creating such powerful interests that will eventually corrode the
organs of self-management, rather than the other way round.
Marxists today attempt to dissociate socialism (in the sense of social
ownership of the means of production) from planning and suggest various
forms of a 'social market' or a 'socialist market economy', as we saw in
Chapter 2. In fact, some of them, like the editors of the French Marxist
journal Actuel Marx, go further and find a direct connection between the
adoption of central planning in Eastern Europe, which, according to them,
became 'inevitable' once the market was abolished, and the totalitarian
character of these regimes. For them, 'the socialist project is not about the
abolition of commodity relations but about the elimination of class
relations'. This way, modern Marxists, by suggesting a synthesis of the
58

market economy, and all that it implies, with 'social' control of the means
of production (which in the framework of the market will serve even more
than in a centrally planned economy the partial interest), end up with
proposals which constitute a synthesis of the worst elements of the market
economy and 'socialism'!

Participatory planning and freedom of choice


A democratic planning mechanism, therefore, has to be decentralized.
One obvious way to decentralize planning is through some kind of
'synthesis' of the market and planning. This is the type of approach
suggested by civil societarians. Thus, for a supporter of this approach who
is engaged in a search for 'new forms of democracy', the real question

251
TOWARDS AN INCLUSIVE DEMOCRACY

about economic democracy is whether 'there are mechanisms of eco-


nomic co-ordination and regulation which allow an element of competi-
tion between self-managed enterprises, and which at the same time
promote social and environmental goals arising from society-wide demo-
cratic processes in economic affairs'. However, what the author means by
59

'democratic processes' has nothing to do with political and economic


democracy, as defined in this book. All that is meant, as becomes clear
from the book's eulogizing of the 'new economic networks' (trade union
committees, health and safety projects, initiatives for socially responsible
fair trade, lesbian and gay movements, etc.), is 'socializing the market
through mechanisms embedded in independent democratic associations
sharing practical knowledge, rather than the state'. 60

The logic behind this proposal is that any scarcity society faces a problem
of democratizing knowledge and particularly economic knowledge, what
economists usually call the 'information flow' problem. Hayek, Mises and
other economists of the Right have argued for long against the possibility
of a planned socialist economy on the grounds that because of the nature
of economic knowledge no administrative system can have all the
information needed for efficient economic decision-taking. As Hayek put
it: 'The economic problem of society is thus not merely a problem of how
to allocate "given" resources . . . it is a problem of the utilization of
knowledge which is not given to anyone in its totality'. He concludes
61

that only an unregulated market, through a price mechanism providing


correct signals of scarcities and desires, could efficiency produce the
required information. In fact, it is this supposed efficiency of the free
market that made the market, according to Hayek, a 'spontaneous'
product of civilization.
In view of what was said in the first part of this book, there is obviously
no need to deal here with the historical distortions of Hayek about the
62

'spontaneous' development of markets, nor with the ridiculous assump-


tion that it is state regulations and social controls that 'distort' prices and
not the built-in trend in any market economy for concentration of
economic power, which then invites social controls to check it. If, as I
attempted to show, both central planning and the market economy
inevitably lead to concentration of power, then neither the former nor the
latter can produce the sort of information flows and incentives which are
necessary for the best functioning of any economic system. It is therefore
only through genuine democratic processes, like the ones involved in an
inclusive democracy, that these problems may be solved effectively.
Still, socialist statists of the 'civil society' tendency, acknowledging this
problem of knowledge, end up with proposals to create independent from
the state democratic organizations and to 'socialize' the market 'through a

252
A CONFEDERAL INCLUSIVE DEMOCRACY

public process of price formation in which social and environmental


considerations would be central'. In other words, disregarding all history
63

to date, they still suggest the 'socialization' of the market economy!


However, as it will be shown below, it is possible to devise a truly
democratic process of economic decision-taking, namely, a system that
may combine an inclusive democracy and planning on the one hand and
freedom of choice on the other. But such a system has to assume away
what 'civil societarians' take for granted: a market economy and a 'statist'
democracy.
As regards the proposals of the libertarian socialist Left, there are two
main models of decentralized planning which attempt a synthesis of
democracy and planning: worker-oriented models and community-
oriented models. As far as the worker-oriented models are concerned, it
can be argued that they cannot provide a meaningful alternative vision of
society for today's conditions: first, because such models usually express
only a particular interest, that of those in the workplace, rather than the
general interest of citizens in a community; and second, because the
relevance of such worker-oriented models (like that of Castoriadis's 64

model for workers' councils which represents perhaps the most elaborate
version) is very limited in today's conditions of post-industrial society.
This is why community-oriented models offer, perhaps, the best frame-
work for integrating workers' control and community control, the parti-
cular and the general interest, individual and social autonomy.
However, there is a recent proposal for 'participatory' planning which,
although it is not based on a community-oriented model, can reasonably
claim that it expresses the general rather than the particular interest. Thus,
Michael Albert and Robin Hahnel put forward an elaborate model of
65

participatory planning in which the allocation of resources is effected


through two types of councils: workers' councils and consumers' councils.
These councils, working at various levels (from neighbourhood up to the
national level) determine production and consumption respectively,
through an elaborate planning process which starts with every citizen
formulating individual work and consumption plans which are then
aggregated and adjusted by means of a series of 'iterations'.
Nonetheless, although participatory planning does represent a signifi-
cant improvement on the usual type of socialist planning proposals and it
does secure a high degree of decentralization, serious reservations may be
raised about its feasibility as well as its desirability. As regards its feasibility
first, the problem that arises here concerns also any kind of democratic
planning which is not market-based. Any such planning has to involve an
arbitrary and ineffective way of finding out what future needs will be (the
information-flow problem) — a problem particularly crucial for non-basic

253
TOWARDS AN INCLUSIVE DEMOCRACY

needs. The notion suggested by supporters of planning, including Albert


and Hahnel, that people's needs can be discovered very easily just by
asking them what they want', in fact, as was pointed out by Paul Auerbach
et al., 'flies in the face of decades of evidence both from East European
planners and from marketing experience in the West'. Even more 66

important are the reservations about the desirability of such a model. Not
only does it involve a highly bureaucratic structure that was aptly
characterized as 'participatory bureaucracy' and which, together with the
multiplicity of proposed controls to limit people's entitlement to consume,
'would lay the ground for the perpetuation or reappearance of the state', 67

but, to my mind, it also involves a serious restriction of individual


autonomy in general and freedom of choice in particular.
This becomes obvious, for instance, from the principles that according
to Albert and Hahnel should guide consumption decision-making. Promi-
nent among the three principles mentioned is that 'decisions about what
individuals wish to consume will be subject to collective criticism [authors'
emphasis] by fellow council members with specific guarantees for preserv-
ing individual freedoms and privacy'. Although the proviso about 'guar-
68

antees' is an obvious attempt by the authors to disperse any impression of


Maoist totalitarianism given by this principle, still, the meaning of the
principle is sufficiently clear. To my mind, the reason for this creeping
totalitarianism is the fact that the model does not make any distinction
between basic needs that obviously have to be met in full and non-basic
needs which in a democratic society have to be left to the citizen's freedom
of choice. The result of not drawing this important distinction is that the
authors end up with a system where each citizen's consumption, produc-
tion and workload has, ultimately, to conform to the 'average' ('If a person
did request more than the average, she might be questioned, and if her
answers were unconvincing, she would be asked to moderate her
request' ).
69

Coming now to the community-oriented models, the main recent


proposal for a community-based society is the one offered by confederal
municipalism. However, the proposals for confederal municipalism do not
offer a mechanism for allocating resources which, within the institutional
framework of a stateless, moneyless and marketless economy and under
conditions of scarcity, will secure both the satisfaction of the basic needs of all
citizens and freedom of choice. Confederal municipalist proposals usually
seem to imply a post-scarcity society in which an allocation mechanism is
superfluous. Thus, Murray Bookchin points out that:
a confederal ecological society would be a sharing one, one based on the
pleasure that is felt in distributing among communities according to their

254
A CONFEDERAL INCLUSIVE DEMOCRACY

needs, not one in which 'cooperative' capitalist communities mire themselves


in the quid pro quo of exchange relationships. 70

Alternatively, some supporters of confederal municipalism seem to


presuppose a 'scarcity society' and support an allocation mechanism based
on democratic planning. Thus, Howard Hawkins argues that:

While self-management of the day-to-day operations by the workers of each


workplace should be affirmed, the basic economic policies concerning needs,
distribution, allocation of surplus, technology, scale and ecology should be
determined by all citizens. In short, workers' control should be placed within
the broader context of, and ultimately accountable to, community control. 71

However, such a model, although it may secure a synthesis of democ-


racy and planning, does not necessarily ensure freedom of choice. In fact,
all models of democratic planning (either of the worker-oriented or
community-oriented variety) which do not allow for some sort of synthe-
sis of the market and planning mechanisms do not provide a system for an
effective exercise of freedom of choice. The issue therefore is how we can
achieve a synthesis of democratic planning and freedom of choice, without
resorting to a real market, which would inevitably lead to all the problems
linked with a market allocation of resources. In the next section, a model
which combines the advantages of the market (in the form of an artificial
'market') with those of planning is outlined.

Outline of a model of economic democracy


The proposed system here aims at satisfying the double aim of: (a) meeting
the basic needs of all citizens — which requires that basic macro-economic
decisions have to be taken democratically; and (b) securing freedom of
choice - which requires the individual to take important decisions affect-
ing his/her own life (what work to do, what to consume, etc.).
Both the macro-economic decisions and the individual citizen's
decisions are envisaged as being implemented through a combination of
democratic planning and an artificial 'market'. But, while in the 'macro'
decisions the emphasis would be on planning, the opposite would be true
as regards the individual decisions, where the emphasis would be on the
artificial 'market'.
So, the system consists of two basic elements:
• A 'market' element that involves the creation of an artificial 'market',
which secures a real freedom of choice, without incurring the adverse
effects associated with real markets.
• A planning element that involves the creation of a feedback process of

255
TOWARDS AN INCLUSIVE DEMOCRACY

democratic planning between workplace assemblies, community assem-


blies and the confederal assembly.
The cornerstone of the proposed model, which also constitutes its basic
feature differentiating it from socialist planning models, is that it explicitly
presupposes a stateless, moneyless and marketless economy, which pre-
cludes the institutionalization of privileges for some sections of society and
private accumulation of wealth, without having to rely on a mythical post-
scarcity state of abundance. In a nutshell, the allocation of economic
resources is made, first, on the basis of the citizens' collective decisions, as
expressed through the community and confederal plans, and, second, on
the basis of the citizens' individual decisions, as expressed through a
voucher system.
The main assumptions on which the model is based are as follows:
• the community assembly is the ultimate policy-making decision body in
each self-reliant community;
• communities are co-ordinated through regional and confederal admin-
istrative councils of mandated, recallable and rotating delegates (regional
assemblies/confederal assembly);
• productive resources belong to each community (demos) and are leased
to the employees of each production unit for a long-term contract;
and
• the aim of production is not growth but the satisfaction of the basic
needs of the community and those non-basic needs for which members
of the community express a desire and are willing to work extra for.
The general criterion for the allocation of resources is not efficiency, as
defined currently in narrow techno-economic terms. Efficiency should be
redefined to mean effectiveness in satisfying human needs and not just
money-backed wants. However, this raises further questions relating to
the meaning of needs, the existence of any hierarchy of needs and, finally,
the question of how real freedom of choice can be secured in the process
of needs-satisfaction.
As far as the meaning of needs is concerned, it is important to draw a
clear distinction between, on the one hand, basic and non-basic needs and,
on the other, between needs and satisfiers, i.e. the form or the means by
72

which these needs are satisfied. Both these distinctions are significant in
clarifying the meaning of freedom of choice in an inclusive democracy.
As regards, first, the distinction between basic and non-basic needs, it is
clear that the rhetoric about freedom of choice in the West is empty.
Within the framework of the market economy, only a small portion of the
earth's population can satisfy whatever real or imaginary 'needs' they have,
drawing on scarce resources and damaging ecosystems, whereas the vast

256
A CONFEDERAL INCLUSIVE DEMOCRACY

majority of people on the planet cannot even cover their basic needs. But
freedom of choice is meaningless, unless basic needs have already been
met. However, what constitutes a 'basic' need and how best it can be met
cannot be defined in an 'objective' way. So, from the democratic view-
point advanced in this book, there is no need to be involved in the debates
between universalist and relativist approaches to needs. In the framework
73

of an inclusive democracy, what is a need, a basic need or otherwise, can


only be determined by the citizens themselves democratically. Therefore,
the distinction between basic and non-basic needs is introduced here
because each sector is assumed to function on a different principle. The
'basic needs' sector functions on the basis of the communist principle 'from
each according to his/her ability, to each according to his/her needs'. On
the other hand, the 'non-basic needs' sector is assumed to function on the
basis of an artificial 'market' that balances demand and supply, in a way that
secures the sovereignty of both consumers and producers.
Second, as regards the distinction between needs and satisfiers, this
distinction is adopted here not because of the usual argument that it allows
us to assume that basic needs are finite, few and classifiable, being in fact
the same in all cultures and all historical periods. Although it may be true
that what changes over time and place is not the needs themselves but the
satisfiers, from our viewpoint, the distinction is useful for clarifying the
meaning of freedom of choice. Today, there is, usually, more than one
way of producing a good or service that satisfies a human need, even a basic
one (types of clothing, etc.). So, freedom of choice should apply to both
basic and non-basic needs. In fact, in an inclusive democracy, a priority
decision that citizens' assemblies will have to take regularly concerns the
quantity and quality of satisfiers that satisfy basic needs. However, what the
best satisfier to meet each particular need is should be determined in-
dividually by each citizen exercising his/her freedom of choice.
But, how can we create effective information flows about individual
needs? The idea explored here involves the combination of a democratic
planning process with a system of vouchers that could be used for the
satisfaction of basic and non-basic needs. Thus, we could imagine the
creation of a system in which there are two main types of vouchers: Basic
Vouchers (BVs) and Non-Basic Vouchers (NBVs), all of them issued on a
personal basis, so that they cannot be used, like money, as a general
medium of exchange and store of wealth.

Meeting the basic needs of all citizens in the confederation


Basic vouchers are used for the satisfaction of basic needs. These vouchers,
which are personal and issued on behalf of the confederation, entitle each
citizen to a given level of satisfaction for each particular type of need that

257
TOWARDS AN INCLUSIVE DEMOCRACY

has been characterized as 'basic', but do not specify the particular type of
satisfier, so that choice could be secured. To ensure consistency as regards
basic needs satisfaction throughout the confederation, the definition of
what constitutes a basic need, as well as the level at which it has to be
satisfied, should be determined by the confederal assembly, on the basis of
the decisions of the community assemblies and the available resources in
the confederation.
The overall number of BVs that are issued is determined on the basis of
criteria which satisfy both demand and supply conditions, at the confederal
level. Thus, as regards demand, planners could estimate its size and mix, on
the basis of the size of the population of the confederation, the size of the
'basic needs' entitlement for each citizen and the 'revealed preferences' of
consumers as regards satisfiers, as expressed by the number of vouchers
used in the past for each type of satisfier. As regards supply, planners could
estimate, on the basis of technological averages, the production level, the
mix, and the resources needed, including the amount of work that each
citizen has to do. Thus every member of the confederation, if s/he is able
to work, will have to work a 'basic' number of hours per week, in a line of
activity of his/her choice, to produce the resources needed for the
satisfaction of the basic needs of the confederation.
Draft plans could then be drawn on the basis of these estimates, and
the confederal assembly could select, on the basis of the decisions
of the community assemblies and workplace assemblies, the plan to be
implemented and the implied amount of resources needed for its
implementation. Each citizen is then issued a number of BVs according to
the special 'category of need' to which s/he belongs. Thus, the confederal
assembly would determine a list of categories of basic needs for each
section of the population using multiple criteria, including sex, age, special
needs, etc. Then, in cases where this 'objective' allocation of BVs has to be
amended to take into account personal circumstances, the community
assemblies could make appropriate adjustments.
As regards caring for the needs of the elderly, children and disabled,
those unable to work are entitled to BVs, in exactly the same way as every
other citizen in the confederation. In fact, one might say that the BVs
scheme will represent the most comprehensive 'social security' system that
has ever existed, as it will cover all basic needs of those unable to work,
according to the definition of basic needs given by the confederal
assembly. It is also up to the same assembly to decide whether, on top of
these BVs, NBVs will be allocated to those unable to work. As far as the
supply of caring services is concerned, if caring is classified as a basic need,
as, of course, it should be, then every member of the community should be
involved in the provision of such services (and would be entitled to BVs)

258
A CONFEDERAL INCLUSIVE DEMOCRACY

- a significant step in the direction of establishing democracy in the


household.

Meeting the non-basic needs of all citizens in the community


Non-basic vouchers are used for the satisfaction of non-basic needs (non-
essential consumption) as well as for the satisfaction of basic needs beyond
the level prescribed by the confederal assembly. NBVs, like BVs, are also
personal but are issued on behalf of each community, rather than on behalf
of the confederation. Work by citizens over and above the 'basic' number
of hours is voluntary and entities them to NBVs, which can be used towards
the satisfaction of non-essential needs. However, while with basic needs
there should be no discrepancies in the degree of their satisfaction, so that
the basic needs of all citizens in the confederation are met equally (as they
should be in an economic democracy), there are no corresponding
compelling reasons for an equal satisfaction of non-basic needs across the
confederation. In fact, community covering of non-basic needs is just an
extension of the individual citizen's freedom of choice. Therefore, if in a
particular community people wish to put more or less work in for the
production of non-basic goods and services, they should be free to do
so.
However, the system should be organized in such a way that differences
among communities as regards non-essential consumption should reflect
only differences in the amount of work involved and not differences in the
area's natural endowments. A basic guiding principle should be that the
benefits from the natural endowments of the confederation as a whole,
irrespective of their geographical location, should be distributed equally
among all communities and regions. This principle should apply to both
basic and non-basic needs satisfaction so that no regional inequities may be
created, other than those due to the amount of work involved.
With technical progress, one could expect that the satisfaction of non-
essential needs will become increasingly important in the future — a fact
confirmed by statistical studies on consumption patterns in the West that
show a verifiable trend of basic-needs saturation. Correspondingly,
74

remuneration will take more and more the form of NBVs. There is,
therefore, a double economic problem with respect to NBVs. First, we
need a fair measure to remunerate non-basic work and, second, we need a
measure of valuing non-basic goods/services that will secure a balance
between their supply and demand at the community level. The classical
solution of expressing the value of goods and services in terms of man
hours (proposed by Proudhon and Marx among others), apart from the
fact that it creates all sorts of problems about equivalence of various types
of work, the 'conversion' of tools/equipment used into man hours, etc., is

259
TOWARDS AN INCLUSIVE DEMOCRACY

also fundamentally incompatible with a libertarian society and, as I will


75

discuss below, with a system of allocation based on freedom of choice.


I would therefore propose that to avoid these problems and, at the same
time, to achieve a balance of demand and supply that satisfies fairness
criteria, we should introduce a kind of 'rationing values' in order to value
non-basic goods/services. The market mechanism, as is well known,
represents rationing by price, something that, as we have seen, represents the
most unfair way of rationing scarce resources, as, in effect, it means
rationing by the wallet. What I propose is a reversal of the process, so that
price by rationing takes place, that is, prices, instead of being the cause of
rationing - as in the market system - become the effect of it. Therefore,
whereas in the market system prices basically reflect scarcities relative to a
skewed income and wealth pattern, and they function as rationing devices
to match the former with the latter, in the proposed system prices reflect
scarcities relative to citizens' desires, and they function as guides for a
democratic allocation of resources. Thus, to calculate the 'rationing value'
(and consequently the price, expressed in terms of a number of non-basic
vouchers) of a particular good/service, planners could divide the total of
NBVs that were used over a period of time (say, a year) to 'buy' a specific
good or service over the total output of that particular good/service in the
same time period. If, for instance, the confederal assembly has ruled that a
mobile phone is not a basic good then the 'price' of a mobile can be found
by dividing the number of NBVs used over the past 12 months for the
'purchase' of mobiles (say 100,000) over the total number of mobiles
produced in the same period (say 1000) giving us a 'price' per mobile of
100 NBVs.
The problem that might arise in this system is that there may be a
mismatch between demand and supply of particular non-basic goods and
services. Thus, to continue with the example of mobiles, the producers of
mobiles and of their components may wish to offer only a limited number
of hours over their 'basic' number of hours of work. In fact, the problem
may arise even if some of them are unwilling to offer extra work, given that
their activity, along with many other activities in today's societies, are
done in the form of team work. In that case, the proposed adjustment
mechanism of artificial 'prices' will be set in motion. The 'price' of
mobiles, expressed in NBVs, will rise pushing the demand for mobiles
down and the rate of remuneration (see next section) up, attracting more
work in this activity. Of course, labour constitutes only part of the
resources used and the overall availability of other resources has to be
determined at regular intervals by the community assembly.
This way, production reflects real demand, and communities do not
have to suffer all the irrationalities of the market economy or of the socialist

260
A CONFEDERAL INCLUSIVE DEMOCRACY

central planning systems I mentioned above. The artificial 'markets'


proposed here offer, therefore, the framework needed so that planning can
start from actual demand and supply conditions (reflecting real preferences
of consumers and producers) and not from abstract notions formed by
bureaucrats and technocrats about what the society's needs are. Also, this
system offers the opportunity to avoid both the despotism of the market
that 'rationing by the wallet' implies, as well as the despotism of planning
that imposes a specific rationing (even if this if is done through majority
vote in the community assembly).
It is obvious that the system proposed has nothing to do with a money
economy or the labour theory of value. Both are explicitly ruled out in this
scheme: the former, because money, or anything used as an impersonal
means of exchange, cannot be stopped from being used as a means of
storing wealth; the latter, because (apart from the problems mentioned
above) it cannot secure freedom of choice. The reason is that even if the
labour theory of value can give a (partial) indication of availability of
resources, it certainly cannot be used as a means to express consumers'
preferences. The inability of East European central planning to express
consumers' preferences and the resulting shortages that characterized the
system were not irrelevant to the fact that it was based on a system of
pricing influenced by the labour theory of value. Therefore, the labour
76

theory of value cannot serve as the basis for an allocative system that aims
at both meeting needs and, at the same time, securing consumer sover-
eignty and freedom of choice. Instead, the model proposed here in-
troduces a system of rationing, which is based on the revealed consumers'
preferences on the one hand and resource availability on the other.
However, a well-known eco-socialist had no difficulty very recently in
comparing an earlier version of the above proposals to the labour theory
77

of value, in order to conclude that 'Fotopoulos suggests a system of work


vouchers (really a form of money based on the labour theory of value) . . .
this is not a new idea, having been postulated by Skinner (1948) and tried
in the American "Walden I I " community in the 1970s'. As is clear from
78

this statement, the critic is unaware of the fact that a money model is not
compatible with a system of vouchers in which, as I had stressed in my
article, 'all [of the vouchers are] issued on a personal basis, so that they
cannot be used, like money, as a general medium of exchange and store of
wealth'. Furthermore, for any careful reader of the proposed system it is
79

obvious that it has nothing to do with the simplistic description of a


utopian community and the primitive scheme of labour credits described
by Skinner - a scheme which does not provide for any freedom of
80

choice, the division of needs into basic and non-basic ones, etc. Finally,
only a gross misunderstanding of my proposal for economic democracy

261
TOWARDS AN INCLUSIVE DEMOCRACY

could make anybody find similarities between it and the hierarchical


scheme of Walden I I , extolled by Skinner, who has rightly been described
by Noam Chomsky as 'a trailblazer of totalitarian thinking and lauded for
his advocacy of a tightly managed social environment'. 81

Allocation of work
The proposed system of allocation of work reflects the basic distinction we
have drawn above between basic and non-basic needs.

Allocation of work in the basic needs sector


As it was pointed out above, covering basic needs is a confederal rather
than a community responsibility. Therefore, allocation of resources for this
purpose is determined by the confederal assembly. So, in the case that a
community's resources are inadequate to cover the basic needs of all
citizens, the extra resources needed should be provided by the confederal
assembly. A significant by-product of this arrangement would be a redis-
tribution of income between communities rich in resources and poor
communities.
Once the confederal assembly has adopted a plan about the level of basic
needs satisfaction and the overall allocation of resources, the community
assembly determines the sorts of work tasks which are implied by the plan,
so that all basic needs of the community are met. As regards the specifi-
cation of work tasks, we may adopt the proposal that Albert and Hahnel
make about job complexes'. So, wherever possible, specific jobs are
replaced by job complexes which are described as follows by the
authors:

A better option (than the capitalist and the co-ordinator approach) is to


combine tasks into job complexes, each of which has a m i x of responsibili-
ties guaranteeing workers roughly comparable circumstances. Everyone does
a unique bundle of things that add up to an equitable assignment. Instead of
secretaries answering phones and taking dictation, some workers answer
phones and do calculations while others take dictation and design
products.82

In principle, therefore, the choice of activity will be an individual one.


However, as the satisfaction of basic needs cannot be left either to the
mercy of the artificial 'market' for BVs, or just to the benevolence of each
citizen, a certain amount of rotation of work may have to be introduced in
case individual choices about working activities to cover basic needs are
not adequate to secure all necessary work.
Rotation of work is suggested here as an exceptional means to balance

262
A CONFEDERAL INCLUSIVE DEMOCRACY

demand and supply of work and not as an obligatory rule imposed on all
citizens, as suggested by Albert and Hahnel. I think that the creation of
comparably empowering lives, which is secured by taking part in commu-
nity and workplace assemblies, in combination with work in job com-
plexes, does not need, as a rule, a system of job rotation which may create
more resentment than benefit to the community. Hierarchical structures at
work and in society in general will be abolished only if citizens have equal
power at workplace and community assemblies rather than if they are just
rotated between jobs. As the authors themselves admit, rotation may not
have the desired effect of balancing inequalities between plants ('hier-
archies of power will not be undone by temporary shuffling'). It is clear
83

that in order to decide what constitutes a hierarchical structure some subtle


distinctions have to be made on the various types of authority, like the
ones discussed by April Carter. The possibility of rotating work is neither
84

an element of a non-hierarchical structure, nor, necessarily, an element of


job equality.

Allocation of work in the non-basic needs sector


As regards non-basic needs, I would propose the creation of another
'artificial' market which, however, in contrast to the capitalist labour
market, would not allocate work on the basis of profit considerations, as in
market economies, or, alternatively, on the basis of the instructions of the
central planners, as in 'actually existing socialism'. Instead, work would be
allocated on the basis of the preferences of citizens as producers and as
consumers. Thus, citizens, as producers, would select the work they wish to
do and their desires would be reflected in the 'index of desirability' I
describe below, which would partially determine their rate of remunera-
tion. Also, citizens, as consumers, through their use of NBVs, would
influence directly the 'prices' of non-basic goods and services and in-
directly the allocation of labour resources in each line of activity, through
the effect of 'prices' on the rate of remuneration.
Therefore, the rate of remuneration for non-basic work, namely, the
rate which determines the number of non-basic vouchers a citizen receives
for such work, would express the preferences of citizens both as producers
and consumers. As regards their preferences as producers, it is obvious that
given the inequality of the various types of work, equality of renumeration
will in fact mean unequal work satisfaction. As, however, the selection of
any objective standard (e.g. in terms of usefulness, effects on health,
calories spent, etc.) will inevitably involve a degree of subjective bias, the
only rational solution may be to use a kind of 'inter-subjective' measure,

263
TOWARDS AN INCLUSIVE DEMOCRACY

like the one suggested by Baldelli, that is, to use a 'criterion of desirability'
85

for each kind of activity.


But desirability cannot be simply assessed, as Baldelli suggests, by the
number of individuals declaring their willingness to undertake each kind
of work. Given the present state of technology, even if we assume that in
a future society most of today's hyper-specialization will disappear, still,
many jobs will require specialized knowledge or training. Therefore, a
complex 'index of desirability' should be constructed with the use of
multiple rankings of the various types of work, based on the 'revealed'
preferences of citizens in choosing the various types of basic and non-basic
activity. The remuneration for each type of work could then be deter-
mined as an inverse function of its index of desirability (i.e. the higher the
index, that is the more desirable a type of work, the lower its rate of
remuneration). Thus, the index will provide us with 'weights' which we
can use to estimate the value of each hour's work in the allocation of non-
basic vouchers.
However, the index of desirability cannot be the sole determinant of the
rate of remuneration. The wishes of citizens as consumers, as expressed by
the 'prices' of non-basic goods and services, should also be taken into
account. This would also have the important effect of linking the set of
'prices' for goods and services with that of remuneration for the various
types of work so that the allocation of work in the non-basic sector may be
effected in a way that secures balance between demand and supply. We
could therefore imagine that half the rate of remuneration in the produc-
tion of non-basic goods and services is determined by the index of
desirability and the rest is determined by the 'prices' of goods and
services.
Of course, given that labour is only part of total resources needed for the
production of non-basic goods and services and that the non-basics sector
is the responsibility of each community, in practice, problems of scarcity of
various — other than labour — resources may be created. However, I think
that such problems could be sorted out through a system of exchanges
between communities similar to the one described below.
An important issue, raised by a penetrating examination of an earlier
version of the above proposals, refers to the specialist nature of some of
86

the services needed for covering basic needs (doctors, teachers etc.) and the
problems that their remuneration creates. Is it fair that 'a highly trained
healer would get only basic vouchers (BVs) to satisfy the basic needs of the
community, while an artist would get non-basic vouchers (NBVs) for a
few hours extra put in painting'? 87

To answer this question, let's see how the proposed system is supposed
to work in some more detail:

264
A CONFEDERAL INCLUSIVE DEMOCRACY

• First, the confederal assembly decides which needs are basic and which
are not and presumably most (but not all) health and education services
would be classified as 'basic'.
• Next, the same assembly selects a particular plan to be implemented that
would secure a balance between confederal demand and supply, as
regards the satisfaction of basic needs. The plan would specify the
number of hours of work and other resources needed in each type of
activity, so that the basic needs of all citizens in the confederation would
be covered.
• Finally, citizens would choose individually the line of basic activity in
which they wished to be involved.

It is obvious that for the types of activity which do not involve special
training or knowledge there should be no problem of work allocation and
remuneration. However, for lines of activity that require special training
or knowledge, a question of remuneration arises, given that most, if not all,
of the work involved is 'basic'. How then might the 'doctor vs. artist
paradox' be resolved? I think a solution to this sort of problem could be
found in terms of specifying the part of the total basic work that does not
involve any specialized training or knowledge and the part which does
(planners could easily estimate the relevant parts). Then, as regards non-
specialized work, all the work might be considered as 'basic' and entitle
citizens to BVs only. The number of hours that each citizen would have to
work on this type of activity would be determined according to the
requirements of the plan adopted by the confederal assembly. However, as
regards specialized work, people engaged in activities requiring specialized
training or knowledge could be entitled to NBVs, for each hour of' basic'
work done. Thus, a doctor, on top of his/her BVs, may receive a number
of NBVs (determined on the basis of the index of desirability) for each
hour of 'basic' work done. This way, the 'doctor/artist paradox' will not
arise because a doctor will automatically get, apart from the BVs, a number
of NBVs, whereas an artist - if his work is not considered by the assembly
to be satisfying a basic need - will receive only BVs and as many NBVs as
the number of hours s/he is prepared to work as an artist. On the other
hand, if the confederal assembly considers the work of an artist as covering
a basic need, then s/he will be entitled to NBVs, the number of which
however will be determined by the index of desirability. Of course, the
proposed solution involves a certain built-in bias in favour of specialized
lines of activity but, given that in a complex society most activities do
involve various degrees of specialized training and knowledge, I do not
think this creates a serious problem - as long as the index of desirability

265
TOWARDS AN INCLUSIVE DEMOCRACY

accurately reflects the community's preferences regarding the various types


of work.

Production targets and technology


All workplaces, producing either basic or non-basic goods and services,
would be under the direct control of workplace assemblies which deter-
mine conditions of work and work assignments, on the basis of citizens'
preferences. As regards production targets in particular we have to dis-
tinguish between the various types of production.

Basic goods and services


The overall production targets for the confederation would be determined
by the confederal assembly, in the procedure described above. The specific
production levels and mix for each workplace would be determined by
workplace assemblies, on the basis of the targets set by the confederal plan
and the citizens' preferences, as expressed by the use of vouchers for each
type of product. Thus, production units could claim a share of the
community resources that would be available (according to the confederal
plan) for their type of production, which would be proportional to the
vouchers offered to them by the citizens as consumers.

Non-basic goods and services


Producers of non-basic goods and services would adjust at regular intervals
their production levels and mix to the number of vouchers they received
(i.e. to demand), provided, of course, that resources were available for
their type of activity. This implies that, apart from the confederal plan,
there should be community plans addressing the allocation of resources in
the non-basics sector; their main aim would be to give an indication of
availability of resources to workplace assemblies so that they could deter-
mine their own production plans in an informed way that would avoid
serious imbalances between supply and demand, as well as ecological
imbalances. So, community planners, on the basis of past demand for
particular types of non-basic goods, the projections for the future, the aim
to achieve ecological balance as well as a balance between supply and
demand, could make recommendations to the community assembly about
possible targets with respect to available resources, so that the assembly
could take an informed decision on a broad allocation of productive
resources between various sectors. However, the actual allocation
between production units would be on the basis of the demand for their
products (shown by the NBVs offered to each unit for its product) and
would take place direcdy between production units, and not through a
central bureaucratic mechanism.

266
A CONFEDERAL INCLUSIVE DEMOCRACY

Intermediate goods
Producers of intermediate goods (equipment, etc.), which are needed for
the production of basic and non-basic goods, would produce a product
mix determined 'by order'. Thus, production units of final goods would
place orders with producers of intermediate goods on the basis of the
demand for their own products and the targets of the plan. So, the
confederal and community plans should also include targets about inter-
mediate goods as well as decisions about the crucial question of resource
allocation through time (i.e. resources to be devoted for community
investment).

Technology
Finally, an important issue that arises with respect to production refers to
the question of whether a new economic system based on economic
democracy presupposes the discarding of present technology. As was
pointed out earlier, technology is directly related to the social organization
in general and the organization of production in particular. It is therefore
obvious that the change in the aims of the economic system, that the
introduction of economic democracy implies, will be embodied in the
technologies that will be adopted by the community and workplace. Of
course, this does not exclude the possibility that the new technologies
might contain parts of the existing technology, provided that they are
compatible with the primary aims of a community-based inclusive
democracy.
In a dynamic economic democracy, investment in technological in-
novations, as well as in research and development in general, should
constitute a main part of the deliberations of the confederated community
assemblies. The advice of workplace assemblies, as well as that of con-
sumers' associations, would obviously play a crucial role in the decision-
taking process.

Distribution of income
The effect of the proposed system on the distribution of income will be
that a certain amount of inequality will inevitably follow the division
between basic and non-basic work. But, this inequality will be quanti-
tatively and qualitatively different from today's inequality: quantitatively,
because it will be minimal in scale, in comparison to today's huge
inequities; qualitatively, because it will be related to voluntary work alone
and not, as today, to accumulated or inherited wealth. Furthermore, it will
not be institutionalized, either directly or indirectly, since extra income
and wealth — due to extra work - will not be linked to extra economic

267
TOWARDS AN INCLUSIVE DEMOCRACY

or political power and will not be passed to inheritors, but to the


community.
The introduction of a minimal degree of inequality, as described above,
does not negate in any way economic democracy, which has a broader
meaning that refers to equal sharing of economic power and not just to
equal sharing of income. From this viewpoint, Castoriadis's proposal for
88

economic democracy suffers from a series of drawbacks arising from the


fact that it assumes a money economy, as well as a real market which is
combined with some sort of democratic planning. Money is still used as an
impersonal means of exchange and a unit of value, although it is suppos-
edly deprived of its function as a store of wealth, as a result of the fact that
the means of production are collectively owned. However, although
collective ownership of means of production does stop money from being
used as capital, nothing - save the use of authoritarian means - can stop
people using it as a means of storing wealth, creating serious inequalities in
the distribution of wealth. Furthermore, the proposed system is based on a
crucial institutional arrangement, what the author describes as 'non-
differentiation of salaries, wages and incomes'. But such an arrangement
89

not only is impractical and makes this system utopian in the negative sense
of the word, but it is also undesirable. As I pointed out above, some
diversity in remuneration as regards non-basic production is necessary to
compensate for the unequal work satisfaction created by widely diverse
types of work.

Exchanges between communities


Self-reliance implies not only an economic but also a physical decentraliza-
tion of production into smaller units, as well as a vertical integration of
stages of production that modern production (geared to the global market)
has destroyed. Therefore, the pursuit of self-reliance by each community
will help significantly in balancing demand and supply. Still, as self-reliance
does not mean self-sufficiency, despite the decentralization, a significant
amount of resources will have to be 'imported' from other communities in
the confederation. Also, a surplus of various types of resources will
inevitably be created that may be available for 'export' to the other
communities.
These 'exchanges' refer to both basic and non-basic production. As
regards the exchanges in basic goods and services, these would be taken
care of by the confederal plan. Although most basic needs would be met
at the community level, the resources needed for the satisfaction of basic
needs would come both from the local community and from other
communities. Also, the satisfaction of basic needs involving more than
one community (e.g. transport, communications, energy) would be

268
Figure 1: How economic democracy works

269
A CONFEDERAL INCLUSIVE DEMOCRACY
TOWARDS AN INCLUSIVE DEMOCRACY

co-ordinated through the confederal plan. So, as regards BVs there can be
no problem with respect to their exchangeability between communities.
But, as regards exchanges of non-basic goods, a problem of exchange-
ability of NBVs arises. This is because the satisfaction of non-basic needs is
not part of the confederal plan and the resources needed for these needs are
basically domestic. Furthermore, the valuation of non-basic goods and
services will differ from community to community, depending on avail-
able resources. Therefore, regional or confederal assemblies should deter-
mine a system of exchanging goods/services, on the basis of criteria that
will take into account the geographical disparity of non-human resources.
Finally, as regards exchanges of goods and services with other confedera-
tions (or countries still characterized by a market economy system), these
might be regulated on the basis of bilateral or multilateral agreements.
To conclude, the above discussion should have made it clear that the
double aim of meeting basic needs and securing freedom of choice
presupposes a synthesis of collective and individual decision-making, like
the one proposed here in terms of a combination of democratic planning
and vouchers. In fact, even if we were ever to reach the mythical stage
when resources are not scarce, questions of choice will continue arising
with respect to satisfiers, ecological compatibility, etc. From this point of
view, the anarcho-communist reference to a usufruct and gift economy, to
the extent that it presupposes 'objective' material abundance, also belongs
to the mythology of a communist paradise. This is an additional reason
why the system proposed here offers a realistic model of how we may
enter the realm of freedom now, rather than in a mythical post-scarcity
society.

Notes
1. See, among others, Jonathan Boswell, Community and the Economy, The
Theory of Public Co-operation (London: Routledge, 1990); Dick Atkinson, The
Common Sense of Community (London: Demos, 1994); Amitai Etzioni, The
Spirit of Community (New York: Simon & Schuster, 1994).
2. See Murray Bookchin, Remaking Society (Montreal: Black Rose Books,
1990). See also Takis Fotopoulos, 'The crisis of the growth economy, the
withering away of the nation-state and the community-based society' in
Education, Culture and Modernization, Peter Alheit et al. (eds) (Roskilde,
Denmark: Roskilde University Centre, 1995).
3. David Clark, 'The concept of community education' in Community Educa-
tion, Garth Allen et al. (eds.) (Milton Keynes: Open University Press, 1987),
pp. 58-60.
4. Michael Taylor, Community, Anarchy, and Liberty (Cambridge: Cambridge
University Press, 1982), pp. 26-32.
5. Michael Taylor also shows conclusively why the liberal arguments of the
'anarcho-capitalist school' (F. Hayek, R. Nozick and others), which claim
that no equality would survive for long without state interference, are

270
A CONFEDERAL INCLUSIVE DEMOCRACY

logically and historically invalid and that, in fact, community is a necessary


condition for the maintenance of an approximate equality; Michael Taylor,
Community, Anarchy, and Liberty, pp. 95-104.
6. Murray Bookchin, From Urbanization to Cities, Toward a New Politics of
Citizenship (London: Cassell, 1995), p. 222.
7. Paul Anderson and Kevin Davey, 'Communitarianism', New Statesman &
' Society (3 March 1995).
8. Amitai Etzioni, 'Common Values', New Statesman & Society (12 May
1995).
9. See his interview in the Athens daily Eleftherotypia (29 May 1995).
10. Jonathan Boswell, Community and the Economy, The Theory of Public Co­
operation, pp. 189-90.
11. Eric Shragge, 'The politics of community economic development' in Com­
munity Economic Development (Montreal: Black Rose Books, 1993), pp. 9-10.
See also Dick Atkinson, The Common Sense of Community, on the topic of
Community Economic Development in the United Kingdom.
12. See particularly Bookchin, From Urbanization to Cities and Remaking Society.
See also Society and Nature, Vol. 1, No. 3 (1993) and in particular the articles
by Murray Bookchin, 'The meaning of confederalism', pp. 41-54; Howard
Hawkins, 'Community control, workers' control and the cooperative com­
monwealth', pp. 55-85; and Takis Fotopoulos, 'The economic foundations
of an ecological society', pp. 1—40.
13. Murray Bookchin, 'The meaning of confederalism', Society and Nature, Vol.
1, No. 3 (1993).
14. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes
(Oxford: Blackwell, 1991), p. 1. The references quoted by Hansen on the
feasibility of direct democracy today include: F.C. Arterton, Teledemocracy
(Washington, DC, 1987), I. McLean, Democracy and New Technology (Cam­
bridge, 1989).
15. See Takis Fotopoulos, 'Direct democracy and electronic "democracy" ', for
a critique of a recent pilot scheme on electronic democracy, financed by the
European Union, which in fact aims at the modernization of the existing
oligarchic system of decision-taking; Eleftherotypia, 25 Feb. 1995.
16. Peter Marshall, Demanding the Impossible, p. 22.
17. L. Susan Brown, The Politics of Individualism (Montreal: Black Rose Books,
1993), p. 53.
18. Murray Bookchin, 'The democratic dimension of anarchism', Democracy and
Nature, Vol. 3, No. 2 (1996).
19. Karl Marx, Critique of the Gotha Programme (Moscow: Progress Publishers,
1966), p. 16.
20. V. Ramaswamy, Ά new human rights consciousness', IFDA Dossier 80
(Jan.-March 1991), p. 9.
21. Karl Hess, 'Rights and reality' in Renewing the Earth: The Promise of Social
Ecology, John Clark (ed.) (London: Green Print, 1990), pp. 130-3.
22. Howard Hawkins, 'Community control, workers' control and the cooper­
ative commonwealth', Society and Nature, Vol. 1, No. 3 (1993) p. 75.
23. See Andre Gorz, Capitalism, Socialism, Ecology (London: Verso, 1994), p. 3.
24. Finn Bowring, 'Andre Gorz: ecology, system and lifeworld', Capitalism,
Nature, Socialism, No. 24 (Dec. 1995).
25. Andre Gorz, Ά gauche c'est par οu?', Lettre Internationale, Summer 1990.

271
TOWARDS AN INCLUSIVE DEMOCRACY

26. See Bookchin's essay 'Towards a liberatory technology' in Post-Scarcity


Anarchism (London: Wildwood House, 1974).
27. Andre Gorz, Capitalism, Socialism, Ecology, p. 7.
28. Andre Gorz, Capitalism, Socialism, Ecology, p. x.
29. As Gorz proposes, quoting Rainer Land; Capitalism, Socialism, Ecology, p.
11.
30. Andre Gorz, Capitalism, Socialism, Ecology, p. 12.
31. John Clark, 'The politics of social ecology: beyond the limits of the city'.
Unpublished paper presented at the International Social Ecology Con-
ference, Dunoon, Scodand (14-19 Aug. 1995). As the author will not allow
any quoting from his paper on the grounds that it is a draft copy, this critique
of eco-communitarianism will not be accompanied with quotes from the
author's paper.
32. See John Clark's review of Deep Ecology for the 21st Century, George Sessions
(ed.) in Trumpeter, Vol. 12, No. 2 (Spring 1995), p. 98. See also Thomas
Berry, The Dream of the Earth (San Francisco: Sierra Club, 1988).
33. Murray Bookchin, The Rise of Urbanization and the Decline of Citizenship (San
Francisco: Sierra Club Books, 1987), p. 55.
34. John Clark, 'The spirit of hope', Delta Greens Quarterly, No. 39 (Summer
1995), p. 2.
35. See Vernon Richards, Lessons of the Spanish Revolution (London: Freedom
Press, 1972), p. 146.
36. Hannah Arendt, The Human Condition (Chicago: The University of Chicago
Press, 1958), p. 44.
37. L. Susan Brown, The Politics of Individualism, pp. 127-8.
38. See, e.g., the article by Robin Blackburn, editor of the once radical New Left
Review, that now advocates a 'socialized market'!; R. Blackburn, 'Fin de
siecle: socialism after the crash', New Left Review (Jan./Feb. 1991), pp.
5-68.
39. See, for instance, M.A. Lutz and K. Lux, Humanistic Economics (New York:
Bootstrap, 1988), Ch. 12; C. George Benello et al., Building Sustainable
Communities (New York: Bootstrap, 1989), Chs 18-20.
40. See, e.g., the work of G. Hodgson, The Democratic Economy (Gretna, LA:
Pelican, 1984), Economics and Institutions (Cambridge: Cambridge University
Press, 1988), and Rethinking Economics (Cheltenham: Edward Elgar, 1992).
41. Michael Taylor, Community, Anarchy, and Liberty, pp. 26-32.
42. Quoted in Paul Ekins, Trade for Mutual Self-Reliance (London: TOES Pub-
lication), 1989, p. 13.
43. See, e.g. Paul Ekins, Trade for Mutual Self-Reliance, p. 9.
44. For an examination of this topic from a Green economics perspective, see,
e.g., Paul Ekins, Local Economic Self-Reliance (London: TOES Publication,
1988).
45. See Takis Fotopoulos, Dependent Development: The Case of Greece (Athens:
Exantas Press, 1985 and 1987), Ch. A.
46. Petr Kropotkin, Mutual Aid (Boston: Extending Horizons, 1914), pp.
181-6.
47. In 1990-91, 27 out of 45 countries with less than 500,000 population and 9
out of 13 with less than 100,000 belonged to the 'high-income' category;
Britannica World Data, 1992. Of course, the fact should be taken into account
that size may play a less significant role with respect to the economic viability

272
A CONFEDERAL INCLUSIVE DEMOCRACY

of an export-led small economy than for that of a self-sufficient one but then,
again, the technology used by the two types of economies may be radically
different.
48. M.A. Lutz and K. Lux, Humanistic Economics, Ch. 12.
49. M.A. Lutz and K. Lux, Humanistic Economics, p. 258.
50. See for a definition of appropriate/inappropriate development, Ted Trainer,
'What is development?', Society and Nature, Vol. 3, No. 1 (1995).
51. Murray Bookchin, 'Municipalization: community ownership of the econ-
omy', Green Perspectives (Feb. 1986).
52. Kenneth J. Arrow, 'Problems mount in application of free market economic
theory', The Guardian (4 Jan. 1994).
53. Will Hutton, The State We're In (London: Jonathan Cape, 1995), p. 237.
54. 'The Americans use more fertilizers for their gardens and tennis lawns than
the Indians for all uses', New York Times (14 June 1979).
55. Ted Trainer, Developed to Death (London: Green Print, 1989), p. 118.
56. As two economists put it in a classical book of orthodox economics (James
M. Henderson and Richard Quandt, Microeconomic Theory, a Mathematical
Approach (New York: McGraw-Hill, 1958)): 'The analysis of Pareto optimal-
ity accepts the prevailing income distribution' (p. 208), and 'It is in this sense
that perfect competition represents a welfare optimum. It does not guarantee
that the second order conditions are fulfilled; nor does it ensure that the
distribution of income (or of utility) is optimal in any sense' (p. 222).
57. Ernest Mandel, 'In defence of socialist planning', New Left Review (Sept./
Oct. 1986), pp. 5-39.
58. Interview with Jacques Bide, editor of Actuel Marx, in Le Monde (reprinted in
Eleftherotypia, 26 Nov. 1995).
59. Hilary Wainwright, Arguments for a New Left (Oxford: Blackwell, 1994), pp.
147-8.
60. Hilary Wainwright, Arguments for a New Left, p. 148.
61. F. Hayek, Individualism and Economic Order (London: Routledge & Kegan
Paul, 1945/1949), pp. 77-8.
62. For an effective critique of Hayek and the 'libertarian' Right, see Alan
Haworth, Anti-Libertarianism, Markets, Philosophy and Myth (London: Rout-
ledge, 1994).
63. Hilary Wainwright, Arguments for a New Left, p. 170.
64. Cornelius Castoriadis, Workers' Councils and the Economics of a Self-Managed
Society (Philadelphia: Wooden Shoe, 1984), originally published in Socialisme
ou Barbarie, 'Sur le contenu du Socialisme', Socialisme ou Barbarie, No. 22
(July-Sept. 1957) and first published in English as a Solidarity pamphlet
Workers' Councils and the Economics of a Self-Managed Society (London:
Solidarity, 1972).
65. Michael Albert and Robin Hahnel, Looking Forward: Participatory Economics for
the Twenty-First Century (Boston: South End Press, 1991).
66. Paul Auerbach et al, 'The transition from actually existing capitalism', New
Left Review No. 170 (July/August 1988), p. 78.
67. John Crump, 'Markets, money and social change', Anarchist Studies, Vol. 3,
No. 1 (Spring 1995), pp. 72-3.
68. Michael Albert and Robin Hahnel, Looking Forward, p. 48.
69. Michael Albert and Robin Hahnel, Looking Forward, p. 49.

273
TOWARDS AN INCLUSIVE DEMOCRACY

70. Murray Bookchin, Urbanization Without Cities (Montreal: Black Rose Press,
1992), p. 298.
71. Howard Hawkins, 'Community control, workers' control and the cooper-
ative commonwealth', Society and Nature, Vol. 1, No. 3 (1993), p. 60.
72. Manfred Max-Neef, 'Human-scale economics: the challenges ahead' in The
Living Economy, Paul Ekins (ed.) (New York: Roudedge & Kegan Paul,
1986), pp. 45-54, and 'Development and human needs' in Real Life Econom-
ics: Understanding Wealth Creation, Paul Ekins and M. Max-Neef (eds)
(London: Routledge, 1992), pp. 197-213.
73. See Len Doyal and Ian Gough, A Theory of Human Need (London: Macmil-
lan, 1991).
74. Ernest Mandel, 'In defence of socialist planning', pp. 14-15.
75. See, for a powerful critique of the classical solution, Petr Kropotkin, The
Conquest of Bread (New York: Penguin, 1972), Ch. 13.
76. See Heinz Kohler, Welfare and Planning (New York: Wiley & Sons, 1966),
pp. 129-36. See also Morris Bornstein, 'The Soviet centrally planned
economy' in Comparative Economic Systems, Morris Bornstein (Homewood,
Illinois: Richard Irwin, 1985).
77. Takis Fotopoulos, 'The economic foundations of an ecological society',
Society and Nature, Vol. 1, No. 3 (1993).
78. David Pepper, Modern Environmentalism (London: Routledge, 1996),
p. 321.
79. Takis Fotopoulos, 'The economic foundations of an ecological society',
p. 32.
80. B.F. Skinner, Walden II (New York: Macmillan, 1976), Ch. 8.
81. Noam Chomsky, The Chomsky Reader, James Peck (ed.) (London: Serpent's
Tail, 1987), p. 158.
82. Michael Albert and Robin Hahnel, Looking Forward, p. 20.
83. Michael Albert and Robin Hahnel, Looking Forward, p. 19.
84. April Carter, Authority and Democracy (London: Routledge, 1979), Ch. 2.
85. Giovanni Baldelli, Social Anarchism (New York: Penguin, 1972), pp.
144-5.
86. Takis Fotopoulos, 'The economic foundations of an ecological society'.
87. Steve Millett in personal communication with the author.
88. Cornelius Castoriadis, 'An interview', Radical Philosophy, Vol. 56 (Autumn
1990), pp. 35-43. Some of the ideas expressed in this interview and
particularly that of wage equality repeat earlier ideas expressed in Workers'
Councils and the Economics of a Self-Managed Society.
89. Cornelius Castoriadis, 'An interview', p. 66.

274
CHAPTER 7

From 'Here' to 'There'

The immediate problem facing the proponents of an inclusive democracy


today is the design of a transitional strategy that would lead to a state where
the democratic project becomes the dominant social paradigm. In this
chapter, a proposal is made for a political and economic strategy that will
create the institutional framework for an inclusive democracy. This
strategy involves a new kind of politics and the parallel gradual shifting of
economic resources (labour, capital, land) away from the market econ-
omy.
In the first part of the chapter, two radical strategies for social change are
assessed: the lifestyle strategy and a variation of it, which attempts a
synthesis of deep ecology and the civil societarian approach. Then, a
transitional strategy towards a confederal democracy is proposed which
involves direct participation in the political and social arena in a way that
does not create incompatibility between the end of an inclusive democracy
and the means to achieve it. In the next section, a new type of political
organization is proposed, which, again, aims at meeting the means—ends
compatibility criterion. Finally, in the last section, a comprehensive
programme for social transformation is proposed.
In the second part of the chapter, an economic strategy for the transition
to economic democracy is explored. Based on the discussion in the
previous chapter, this section is structured around the transitional steps
required in order to create the preconditions for economic democracy.
Thus, the discussion of the steps that may be taken to enhance self-reliance
is followed by proposals about the transition to a 'demotic' economy and
to a confederal allocation of resources.
The point that is particularly stressed in this chapter is that all the
proposed strategies for political and economic change and the transitional
projects involved are useless unless they are part of a comprehensive
programme for social transformation that explicitly aims at replacing the
market economy and statist democracy by an inclusive democracy.

275
TOWARDS AN INCLUSIVE DEMOCRACY

A new kind of politics


Old politics are doomed, as the accelerating internationalization of the
market economy is met by the continuous decline of representative
'democracy'. The impotency of the state to control effectively the market
forces, in order to tackle the fundamental problems of massive unemploy-
ment, poverty, rising concentration of income and wealth and the con-
tinuing destruction of the environment, has led to massive political apathy
and cynicism, particularly among the underclass and the marginalized. As
a result, all parties today compete for the vote of the '40 per cent society'
which, effectively, determines the political process.
At the same time, the pipe dreams of some parts of the 'Left' for a
democratization of the civil society are also doomed. The internationaliza-
tion of the market economy is being inevitably followed by the inter-
nationalization of the civil society. In other words, competition imposes
the least common denominator standards as far as social and ecological
controls on markets are concerned. Therefore, that type of civil society is
bound to prevail which is consistent with the degree of marketization that
characterizes the most competitive parts of the global economy.

The cul-de-sac of lifestyle strategies


Setting aside the approaches for social change which take for granted the
existing institutional framework of the market economy and liberal de-
mocracy, like the various versions of the 'civil societarian approach', the
main approaches today which aim at a radical social change are a lifestyle
strategy and a strategy based on confederal municipalism.
There are several versions of the lifestyle strategy. However, there is a
common element that characterizes all these approaches. They all involve
no intervention at all in the political arena and usually not even in the
general social arena, in the form of participating in the collective struggles
of workers, the unemployed and other social groups — other than in
struggles on specific 'Green' issues, like animal rights campaigns, etc.
Thus, there is first the approach usually adopted by the supporters of
deep ecology, as well as by those libertarians attempting to develop a new
hybrid between deep and social ecology, like Peter Marshall's 'libertarian
1

ecology' in Britain, or John Clark's 'eco-communitarianism' in the USA.


This approach involves no direct interference in the political and social
arenas but a process which, starting from the individual, and working
through affinity groups, aims at setting an example of sound and preferable
lifestyles at the individual and social level: Community Economic
Development projects, 'free zones' and alternative institutions (free
schools, self-managed factories, housing associations, Local Employment

276
FROM 'HERE' TO 'THERE'

and Trading Systems (LETS), communes, self-managed farms and so


on).
However, such an approach, which has been criticized as individualistic
in nature, is, by itself, utterly ineffective in bringing about any radical
2

social change. Although helpful in creating an alternative culture among


small sections of the population and, at the same time, morale-boosting for
activists who wish to see an immediate change in their lives, this approach
does not have any chance of success — in the context of today's huge
concentration of power - in building the democratic majority needed for
radical social change. The projects suggested by this strategy may too easily
be marginalized, or absorbed into the existing power structure (as has
happened many times in the past) whereas their effect on the socialization
process is minimal - if not nil. Furthermore, lifestyle strategies, by
concentrating on single issues (animal rights campaigns, etc.), which are
not part of a comprehensive political programme for social transformation,
provide a golden opportunity to the ruling elites to use their traditional
divide and rule tactics. For instance, the British government prefers to rely
on private security firms (and only in the last resort on the police),
recruiting people from the underclass, to deal with Green protests. The
result is that the repressive nature of the state is hidden and Green activists
are reduced to fighting battles with the unemployed and the marginalized
disguised as 'security guards'! 3

An alternative lifestyle approach, which seems, prima facie, to be critical


of lifestyle strategies, but, in effect, is also based on individual rather than
political activity, is the one suggested by Ted Trainer. This approach is
4

based on the supposition that if enough people are educated and persuaded
to change individually their lifestyle then 'capitalism will shrivel and die':
If increasing numbers of people move to the slow lane where they can live
satisfactorily without consuming much then capitalism is doomed. It fears
nothing so much as declining sales. No corporation will ever sell me
fashionable clothes or a sports car. If we make it convenient and attractive for
more and more people to move to conserver ways, capitalism will shrivel and
die.
5

However, radical social change can never be achieved outside the main
political and social arena. The elimination of the present power structures
and relations can neither be achieved 'by setting an example' nor through
education and persuasion. A power base is needed to destroy power. But
the only way that an approach aiming at a power base would be consistent
with the aims of the democratic project is, to my mind, through the
development of a comprehensive programme for the radical transforma-
tion of local political and economic structures.

277
TOWARDS AN INCLUSIVE DEMOCRACY

The strategy of confederal municipalism offers a radical alternative to the


lifestyle strategies and is perfectly compatible with the democratic project.
This approach aims 'to transform and democratize city governments, to
root them in popular assemblies, to knit them along confederal lines, to
appropriate a regional economy along confederal and municipal lines'. In 6

other words, the goal is to develop 'a public sphere - and in the Athenian
meaning of the term, a politics — that grows in tension and ultimately in a
decisive conflict with the state'. 7

Although some of the steps proposed by the lifestyle strategy are not
incompatible with the logic of confederal municipalism (for example, co-
ops, local currencies, etc.), still, there is a crucial difference between the
two strategies. As Murray Bookchin aptly pointed out:
Specific proposals for decentralization, small-scale communities, local auton-
omy, mutual aid and communalism . . . are not intrinsically ecological or
emancipatory. Such an outcome depends ultimately on the social and
philosophical context in which we place such programmes 8

To my mind, the basic difference between the two approaches as


regards their 'context' refers to the role of the individual with respect to
social change. In lifestyle strategies, social change is seen to start from the
lifestyle of the individual, and to proceed through bypassing the state and
the market economy, rather than through contesting and attempting to
replace them with new social institutions. On the other hand, the con-
federal municipalism strategy emphasizes the role of the social individual,
that is, of the individual who takes part in political struggles at the local
level and social struggles in general, with the aim to effect social change,
not 'through setting an example', but through creating a confederation of
municipalities which will be in tension with the nation-state, until the
latter is replaced by the former. So, this strategy not only avoids the social
9

marginalization to which the lifestyle strategy inevitably leads (as the


almost insignificant social impact of movements inspired by this strategy
has shown in the last 25 years) but it also escapes the trap of being 'so
skewed towards the idea of the reforms of the individual's values and
lifestyle, as the primary political route to radical social change, that it ends
up seeming positively antipathetic to the notion of the collective' — the 10

New Age movement being a clear indication of this trap.

Industrialism and the transition to an ecological 'democracy'


A recent attempt to define 'ecological democracy' in terms of a
community-based society and confederations has created the impression
that it may be related to the project for an inclusive democracy and
confederal municipalism. This impression is utterly false. As I will try to

278
FROM 'HERE' TO THERE'

show in this section, this approach has nothing to do with either democ-
racy or confederal municipalism. In essence, it represents a cross between,
on the one hand, deep ecology and the lifestyle approach and, on the
other, the civil societarian approach we considered earlier.
The close affinity of this approach to deep ecology becomes obvious by
the fact that it prefers to describe the present socio-economic system as
'industrialism' rather than as a market economy or capitalism. Indus-
trialism, for Roy Morrison, 'is not simply' capitalism. Instead, indus-
trialism is defined as 'a system for maximizing production and consump-
tion, but it is also something more: industrialism is a civilization'. Further
11

on, we are informed that industrialism is characterized everywhere 'by two


central imperatives: to maximize production and consumption, and to
maximize profit and/or power . . . hierarchy, progress and technique,
linked to form the steel triangle of industrialism'. 12

The above definition makes immediately clear that the author is not in
effect talking about the institutional framework of the market economy
and the consequent growth economy but about a 'civilization'; in other
words a cultural phenomenon rather than a socio-economic system and its
ideology. No wonder that Morrison sees maximization of production and
consumption, as well as maximization of profit, as two central imperatives
characterizing industrial civilization and not as imperatives implied by the
dynamics of the market economy and capitalist property relations respec-
tively. Furthermore, by confusing the growth economy with growth
ideology, he puts in the same bag of 'industrialism' market economies as
well as the defunct regimes of 'actually existing socialism', although power
structures in the latter had taken very different forms from those in the
former. His description of hierarchy confirms the suspicion that the author
is not talking about a socio-economic system but about what he calls 'a
basic organizing principle of our civilization'. Thus, hierarchy is
13

described as 'the basic industrial ordering principle. Industrial hierarchies


rest not on caste or class, but on success in fulfilling industrial im-
peratives'. So, the fact that industrial hierarchies, which control the
14

means of production, pursue basically the same objectives as the elites


owning the means of production is ignored by the author who seems to
adopt the myth (presently almost defunct) of the divorce of ownership
from control in industry.
Still, this problematic is not original at all. It seems that deep ecologists
are presently reaching the logical conclusions of their approach, which has
always emphasized in its interpretation of the ecological crisis the im-
portance of value systems, rather than of institutions, and of science and
technology, rather than of the market system. It is not therefore surprising
that they now assume away the market economy itself. Thus, as Janet Biehl

279
TOWARDS AN INCLUSIVE DEMOCRACY

points out in a review of a recent book on the Industrial Revolution:


'Kirkpatrick Sale explicitly defines industrialism as "the ethos encapsulat-
ing the values and technologies of Western civilization". This sub-
jectivization of "industrialism" as an "ethos" precludes a capitalistic
component in Sale's industrialism.' 15

It is clear that deep ecologists and Morrison, using a simplistic 'historical'


analysis, which cannot distinguish between basic concepts like capitalist
property relations, the market economy and the growth economy on the
one hand, and the growth ideology on the other, end up by mixing
everything up under the rubric of 'industrialism', which is supposed to be
the cause of all our ills! Therefore the fact that, as I tried to show earlier, the
Industrial Revolution happened in a society where the means of produc-
tion were under private ownership and control is simply ignored by this
approach. Equally ignored is the fact that the defunct regimes of 'actually
existing socialism', in fact, had the option of not adopting a growth
economy but simply did not pursue it. Not because they aimed at
becoming industrial societies and therefore had to adopt the compre-
hensive system of social relations shaped by industrial reality, as Morrison
seems to argue; not even because of the 'objective' factors which obviously
necessitated a certain amount of economic development to meet the needs
of their peoples. Although these factors did play a role, the main reason
they did so was a 'subjective' factor, that is, the fact that the identification
of Progress with economic growth was an essential part of their ideology
(see Chapter 2).
Also, the affinity of this approach to civil societarianism and the fact that
Morrison, like civil societarians, has no real understanding of democracy as
a different form of society, becomes obvious by the meaning he attaches to
political and economic democracy, as well as the transition to it. Thus, the
ecological civilization is, according to Morrison, 'predicated upon the
ability of civil society to create a wide range of voluntary social forms that
allow democratic choices to creatively limit and transform industrialism'. 16

Like civil societarians, Morrison takes for granted the institutional frame-
work defined by the market economy and 'statist' democracy. This is why,
as he stresses in describing the transition to an ecological democracy, 'Civil
society and its creations are not contesting for power, but working for
community and freedom . . . their goal is not to seize or abolish state
power, or to substitute planning for market mechanisms, but to transform
both state and market.' It is therefore obvious that this approach, utterly
17

ignorant of the dynamics of the market economy and statism, assumes that
a new ecological democracy could somehow emerge out of the present
institutional framework, not through contesting it but through bypassing
it!

280
FROM 'HERE' TO THERE'

In this context, it is not surprising that the economic democracy is not


defined in terms of a marketless, moneyless and stateless society. As
Morrison puts it: An ecological or "green" economy involves
community-based, voluntary market exchange, combined with decen-
tralized, democratic political mediation and planning that flows from the
grassroots.' And to dispel any doubts about the meaning of this economic
democracy he describes Mondragon in Spain, Seikatsu in Japan and Co-op
Atlantic in Canada as representing 'ecological democracy in action'. 18

Similarly, the fact that the author does not have any real understanding
of what democracy means is made abundantly clear when he seems unable
to see the qualitative difference between the classical meaning of democ-
racy and what passes as 'democracy' today: 'Democracy's record ranges
from the very imperfect Athenian system of 2,500 years ago to the still
quite imperfect US democracy . . . and to the dozens of fragile new systems
across the world that may represent democracy's new beginning. These
new beginnings come with the assertion of civil society as a creative venue
for change, as with Solidarity in Poland.' 19

In consistency with this approach's notion of 'democracy', the transi-


tion to ecological democracy will not be achieved through a programme
that contests the present institutional framework, but, instead, through 'a
program for the devolution of power to be advanced from below, from the
arena of civil society'. This would mean a community empowerment
20

strategy involving community associations, organizations, institutions and


community enterprises, which, without any power base, will be followed,
like magic, by the withering away of the state and the market economy! In
this context, it is interesting to see how even the concept of confederation
is distorted by this approach. Thus, confederation does not mean any more
the integration of community-based democracies into a new form of social
organization to replace the state and the market economy. Instead, we
learn that:

an ecological democracy is organized on the basis of confederation, the third


broad theme in society's transformation. Confederation is not simply a matter
of formal relationships between governments. It embraces a limited degree of
sovereignty and association. . . . Confederation is the broad mix of social
connections that form the dynamic matrix of an ecological society, involving
groups on all levels and of all sorts. For example, confederations with children
will include relations between schools, parent groups, hospitals, day-care
centres and co-operative economic groups. Confederation means multiple
alliances.21

It is therefore obvious that neither the transitional strategy described by

281
TOWARDS AN INCLUSIVE DEMOCRACY

this approach nor the meaning assigned by it to democracy itself are


relevant to the project for an inclusive democracy.

A strategy for the transition to a confederal inclusive


democracy
To my mind, the only realistic approach in creating a new society beyond
the market economy and the nation-state, as well as the presently emerg-
ing new international statist forms of organization, is a political strategy
that comprises the gradual involvement of increasing numbers of people in
a new kind of politics and the parallel shifting of economic resources
(labour, capital, land) away from the market economy. The aim of such a
transitional strategy should be to create changes in the institutional frame-
work and value systems that, after a period of tension between the new
institutions and the state, would, at some stage, replace the market
economy, statist democracy, as well as the social paradigm justifying'
them, with an inclusive democracy and a new democratic paradigm
respectively.
It is clear that the transitional stage contains features which would not be
in the ultimate society. Many of the features, for instance, that constitute a
transitional economic democracy will obviously not be components of
future society. The inclusive democracy, as I described it in the previous
two chapters, is a stateless, moneyless, marketless society. On the other
hand, the transitional strategy, taking for granted the statist 'democracy'
and the market economy, aims to create alternative institutions and values
that will lead to the phasing out of present hierarchical institutions and
values. In this context, the criticisms raised by a well-known eco-socialist
against an earlier version of the proposals in this chapter are obviously out
22

of place. Thus, David Pepper, mixing up the economic features of a


transitional strategy towards economic democracy with the proposal for
economic democracy itself, concludes that 'Fotopoulos clearly advances a
money economy: indeed all these components also feature in "main-
stream" green capitalistic economics'. 23

So, the question that arises here is what sort of strategy can ensure the
transition to an inclusive democracy — in particular, what sort of action and
political organization can be part of the democratic project. In this
problematic we have to deal with questions about the significance of
struggles and activities which are related to every component of the
inclusive democracy: the economic, political,, social and ecological. A
general guiding principle in selecting an appropriate transitional strategy is
consistency between means and ends. It should be clear that a strategy
aiming at an inclusive democracy cannot be achieved through the use of
oligarchic political practices, or individualistic activities.

282
FROM 'HERE' TO 'THERE'

Thus, as regards, first, the significance of collective action in the form of


class conflicts between the victims of the internationalized market econ-
omy and the ruling elites, I think there should be no hesitation in
supporting all those struggles which can assist in making clear the repres-
sive nature of statist democracy and the market economy. However, the
systemic nature of the causes of such conflicts should be stressed and this
task can obviously not be left to the bureaucratic leaderships of trade
unions and other traditional organizations. This is the task of workplace
assemblies that could confederate and take part in such struggles, as part of
a broader democratic movement which is based on communities and their
confederal structures.
Next comes the question of the significance of grassroots action in the
form of education or, alternatively, direct action and activities like Com-
munity Economic Development projects, self-managed factories, housing
associations, LETS schemes, communes, self-managed farms and so on. It
is obvious that such activities cannot lead, by themselves, to radical social
change. On the other hand, the same activities are necessary and desirable
parts of a comprehensive political strategy, where contesting local elec-
tions represents the culmination of grassroots action. This is because
contesting local elections does provide the most effective means to
massively publicize a programme for an inclusive democracy, as well as the
opportunity to initiate its immediate implementation on a significant social scale.
In other words, contesting local elections is not just an educational
exercise but also an expression of the belief that it is only at the local level,
the community level, that direct and economic democracy can be founded
today. Therefore participation in local elections is also a strategy to gain
power, in order to dismantle it immediately, by substituting the decision-
taking role of the assemblies for that of the local authorities, the day after
the election was won. Contesting local elections gives the chance to start
changing society from below, which is the only democratic strategy, as
against the statist approaches which aim to change society from above. It is
because the community is the fundamental social and economic unit of a
future democratic society that we have to start from there to change
society, whereas statists, in consistency with their statist view of
democracy, believe they have to start from the top, the state, in order to
'democratize' it.
Statists therefore are perfectly consistent with their aims when they take
part in national elections, federal elections or Euro-elections, whereas
supporters of an inclusive democracy would be utterly inconsistent with
their declared aims in doing so. In brief, the fundamental difference
between local elections on the one hand and parliamentary elections on
the other (national or Euro-elections) is that whereas contesting the

283
TOWARDS AN INCLUSIVE DEMOCRACY

former is compatible with the aim of an inclusive democracy and is also


amenable to lead, by itself, to the dismantling of power structures,
contesting parliamentary elections is neither of the two. From this view-
point, the distinction that Howard Hawkins makes between running for
24

national elections (just to educate) and running for local elections (to
educate and win in order to implement the confederal municipalist
programme) introduces a double inconsistency: first, an inconsistency
between the end of an ecological democracy and the means to achieve it,
which, at least, could result in confusion about the real nature of the
movement; second, an inconsistency between the true nature of running
for a statist office, which is a process that incorporates the logic of a
different social system ('I am running in order to use my office and solve
your problems') and the educational nature assigned to it by Hawkins ('I
am running not to hold office'), an inconsistency which could easily
marginalize the candidates as irrelevant to the election process.
The immediate objective should therefore be the creation, from below,
of 'popular bases of political and economic power', that is, the establish-
ment of local public realms of direct and economic democracy which, at
some stage, will confederate in order to create the conditions for the
establishment of a new society. To my mind, this approach offers the most
realistic strategy today to tackle here and now the fundamental social,
economic and ecological problems we face and at the same time to
dismantle the existing power structures. A political programme based on
the commitment to create institutions of an inclusive democracy will
eventually capture the imagination of the majority of the population,
which now suffers from the effects of the political and economic concen-
tration of power:
• through their exclusion from today's 'public' realm, which is monopo-
lized by the professional politicians;
• through their deprivation of the possibility of controlling the way their
needs are satisfied, which is now left to the market forces; and
• through the everyday worsening of the quality of life because of the
inevitable deterioration of the environment, which the market
dynamics impose.
Once the institutions of inclusive democracy begin to be installed, and
people, for the first time in their lives, start obtaining real power to
determine their own fate, then the gradual erosion of the dominant social
paradigm and of the present institutional framework will be set in motion.
A new popular power base will be created. Town by town, city by city,
region by region will be taken away from the effective control of the
market economy and the nation-state, their political and economic struc-

284
FROM 'HERE' TO 'THERE'

tures being replaced by the confederations of democratically run commu-


nities. A dual power in tension with the state will be created. Of course, at
some stage, the ruling elites and their supporters (who will surely object to
the idea of their privileges being gradually eroded) after they have
exhausted subtler means of control (mass media, economic violence, etc.),
may be tempted to use physical violence to protect their privileges, as they
have always done in the past. But, by then, an alternative social paradigm
will have become hegemonic and the break in the socialization process —
the precondition for a change in the instituted society — will have occurred.
The legitimacy of today's 'democracy' will have been lost. At that stage,
the majority of the people will be prepared to counter state violence in
order to defend the new political and economic structures. Once citizens
have tasted a real democracy, no amount of physical or economic violence
will be enough to 'persuade' them to return to pseudo-democratic forms
of organization.

A new type of political organization


The implementation of a strategy like the one outlined above requires a
new type of political organization which will mirror the desired structure
of society. This would not be the usual political party, but a form of
'democracy in action', which would undertake various collective forms of
intervention at:
• the political level (creation of 'shadow' political institutions based on
direct democracy, neighbourhood assemblies, etc.);
• the economic level (establishment of community units at the level of
production and distribution which are collectively owned and con-
trolled);
• the social level (democracy in the workplace, the household, etc.);
and
• the cultural level (creation of community-controlled art and media
activities).
However, all these forms of intervention should be part of a compre-
hensive programme for social transformation aiming at the eventual
change of each municipality won in the local elections into an inclusive
democracy (see next section). The new political organization could, for
instance, take the form of a confederation of autonomous groups (at
regional, national, continental and world levels) aiming at the democratic
transformation of their respective communities. The members of this
organization are not committed to any closed philosophical system but
only to the project for an inclusive democracy based on a confederation of
communities. The activists in this movement function not as 'party cadres'

285
TOWARDS AN INCLUSIVE DEMOCRACY

but as a catalyst for the setting up of the new institutions. Their commit-
ment is to the democratic institutions themselves and not to the political
organization, or, as Murray Bookchin puts it, to 'the social forms, not the
political forms'.25

The establishment of democracy is bound to be a long process involving


a huge popular movement. As Castoriadis points out, the setting up of
democracy can only come about
from an immense movement of the population of the world and it can only he
conceived of as extending over an entire historical period. For such a
movement — which goes far beyond everything habitually thought of as
'political movement' — will not come about unless it also challenges all
institutional significations, the norms and values which dominate the present
system . . . as a profound psychical and anthropological transformation, with
the parallel creation of new forms of living and new significations in all
domains. 26

It is therefore necessary that the new political organization be founded


on the broadest political base possible. To my mind, this means a broad
spectrum of radical movements, involving radical ecologists, supporters of
the autonomy project, libertarian socialists, radical feminists, libertarian
leftists and every other current that adopts the democratic project.
Given the broad perspective of the project for an inclusive democracy,
the new movement should appeal to almost all sections of society, apart
from the overclass and the ruling elites. Thus the economic democracy
component of the project should primarily appeal to the main victims of
the internationalized market economy, the '60 per cent disadvantaged
majority' which, as we saw above, includes the underclass and the
marginalized, i.e. the unemployed, blue collar workers, low-waged white
collar workers, part-timers, occasional workers, farmers who are phased
out because of the expansion of agribusiness, as well as the prospective
members of the professional middle classes, the students, who also see their
dreams for job security disappearing fast in the 'flexible' labour markets
being built. It should also appeal to a significant part of the '40 per cent'
society which, unable to join the 'overclass', lives under conditions of
constant insecurity.
But, apart from the class problems which an economic democracy
promises to solve, there are also the transclass problems of gender, age,
ethnic and hierarchical oppression as well as the major ecological
27

problem. An inclusive democracy, and in particular its components of


direct democracy, democracy in the social realm and ecological democ-
racy, should appeal not just to the victims of the market economy system
but also to all those alienated by the present statecraft which passes as

286
FROM 'HERE' TO 'THERE'

'polities'; workers who are alienated by the hierarchical structures at the


workplace; women who are alienated by the hierarchical structures both at
home and the workplace; ethnic or racial minorities who are alienated by
a discriminatory 'statist' democracy, and so on. Finally, the ecological
democracy component of the project should appeal to every section of
society which is concerned about the destruction of the natural world
in general and the accelerating deterioration in the quality of life in
particular.
The development of a new, broad radical democratic movement today
would represent the synthesis, as well as the transcendence, of the major
social movements for change in this century. I think the only realistic way
out of the present multidimensional crisis is the creation of such a radical
movement, which, without any ideological preconceptions, apart from its
commitment to an inclusive democracy, will fight to stop the continuing
— and lately accelerating - destruction of human life and natural resources
and for the establishment of the realm of freedom here and now.

A comprehensive programme for social transformation


An explicit part of a comprehensive programme for social change should
be the elaboration of the overall objective to create a different form of
social organization, based on an inclusive democracy. In other words, the
programme should make absolutely clear that the ultimate objective of the
various projects included in it is the replacement of the present oligarchic
structure with an inclusive democracy. This implies that such a pro-
gramme should be fought for not just as a kind of new politics but as the
political structure itself leading to an inclusive democracy. This is why, as
it was stressed above, the community level is the only political level at
which supporters of such a programme should develop their political
activity. Once a new political structure has been created in a number of
communities, then the growing change in the balance of power against
statism and the market economy will create the preconditions for a change
in the economic structure as well.
Thus, the economic programme for a transition to an inclusive democ-
racy, starting from demands that mobilize people around their immediate
concerns, should have the following basic aims:

(a) to develop an alternative consciousness to the present one, as regards


methods of solving the economic and ecological problems in a
democratic way. It should therefore connect today's economic and
ecological crisis to the present socio-economic system and the need to
replace it with an inclusive democracy based on confederated self-
reliant communities; and

287
TOWARDS AN INCLUSIVE DEMOCRACY

(b) to make proposals on how to start building the economic institutions


themselves that would lead to an inclusive democracy. It should
therefore propose measures that could lead both to greater economic
self-reliance and to democratic procedures in taking decisions affect-
ing the economic life of the people in the community.
As regards (a), that is, the aim of creating an alternative consciousness,
the programme should show clearly that problems like unemployment,
poverty and work alienation as well as poor quality of life, pollution and
environmental destruction are all connected to an economic system based
on the concentration of political and economic power in the hands of
elites that represent a very small proportion of the population. The
relationship of each of the main institutions of society to these problems
should be particularly stressed. Thus, it should be shown that:
• the market allocation of resources leads to maldevelopment, unemploy-
ment and poverty;
• the private ownership of productive resources does not allow any
economic democracy to flourish but instead leads to economic and
political oligarchy, the alienation of the vast majority of people with
respect to their jobs, as well as the perpetuation of inequality; and
• the hierarchical organization of society, both at the 'macro' level (state)
and the 'micro' level (hierarchical relations at work, family, school, etc.)
is incompatible with democracy in the social realm, autonomy and
freedom.
As regards (b), that is, the aim of building alternative economic institu-
tions leading to economic democracy, the programme should make clear
why the taking over by a radical democratic movement of several muni-
cipalities could create the conditions for:
• the drastic increase of the community's economic self-reliance;
• the setting up of a demotic economic sector, i.e. a sector owned by the
demos; and
• the creation of a democratic mechanism to make economic decisions
affecting the demotic sector of the community, as well as decisions
affecting the life of the community as a whole (local production, local
spending, local taxes, etc.).
Thus, a comprehensive programme for social change should make clear
that citizens, for the first time in their lives, will have a real power in
determining the economic affairs, albeit partially at the beginning, of their
own community. All this, in contrast to today's state of affairs when
citizens supposedly have the power, every four years or so, to change the
party in government and its tax policies but, in effect, they are given

288
FROM 'HERE' TO 'THERE'

neither any real choice nor any way of imposing their will on professional
politicians. This becomes obvious, for instance, if one looks at the
economic programmes of national parties which are expressed in such
broad and vague terms that they do not commit politicians to anything
concrete. Furthermore, as regards the spending of money collected by
taxation, or borrowing, it is clear that people have no power at all to decide
its allocation among different uses.

The transition to economic democracy


But, let us examine the steps that may be taken in the transitional period,
so that we can move towards meeting the preconditions for economic
democracy. These preconditions were identified in the previous chapters
as community self-reliance, demotic ownership of productive resources,
and confederal allocation of resources.

Self-reliance in the transitional period


The question that arises here is how can we create the conditions for self-
reliance today; that is, how can we help the transition from 'here' to
'there', from dependent to self-reliant communities? There is significant
literature on local economic self-reliance which can provide valuable
28

clues for the steps to be taken in a transitional phase towards an inclusive


democracy. Furthermore, lately, more and more local communities,
which suffer the consequences of dependent decentralization, are begin-
ning to encourage local self-reliance through local initiatives, to meet local
needs with local resources. However, all this literature, as well as the
29

corresponding local efforts, aim to enhance self-reliance, taking for gran-


ted the market economy and the liberal democracy. On the other hand, a
movement for an inclusive democracy has to develop a transitional strategy
for a radical decentralization of power to the municipalities with the
explicit aim of replacing the present political and economic institutional
framework. The following proposals may be taken as a contribution to this
effort.
The basic preconditions for the increase in local economic self-reliance
refer to the creation of local economic power, in the form of:
• financial power;
• tax power; and, above all,
• power to determine production.
As regards financial power, the establishment of a community bank
network is necessary in this process. However, the establishment of such a
network presupposes that the movement for an inclusive democracy has

289
TOWARDS AN INCLUSIVE DEMOCRACY

contested local elections and already taken over a number of municipal-


ities. Still, even before this happens, there are a number of steps that can be
taken in this direction, even at the level of single municipalities. Such steps
are:
• Demotic credit unions (i.e. financial co-ops, supported by the demos) could
be set up to provide loans to their members for their personal and
investment needs. One could also imagine the extension of the role of
credit unions, so that the savings of members are used for local develop-
ment and social investment, in other words, for investment in local
people to enable them to build up viable employment. This way,
demotic credit unions could become the basis on which a community
bank network could be built at a later stage.
• A demotic currency (i.e. a currency controlled by the demos) could play a
crucial role in enhancing local economic self-reliance. This is because a
local currency makes possible the control of economic activity by the
community and, at the same time, could be used as a means for
enhancing the income of the community members. The demotic
currency does not replace the national currency but complements it. As
a first step, present LETS schemes could be municipalized. Later on, a
30

demotic credit card scheme may be created with the aim of covering the
basic needs of all citizens. Thus, citizens may be issued with free demotic
'credit cards' in which the credit limit would be determined by income
and wealth (i.e. the higher the citizen's level of income and wealth the
lower the credit limit). These credit cards could be used for the purchase
of locally produced goods and services. Such a scheme could therefore
play a useful role in the transition to a voucher system that would replace
all currencies in an inclusive democracy.
As regards taxing power, the transitional programme for an inclusive
democracy should involve steps for the shift of taxing power from the
national to the local level, as a basic step in creating conditions of economic
self-reliance. Then, a new demotic tax system (i.e. a tax system controlled by
the demos) could be introduced that could attempt to meet, as far as possible
within the constraints of a market economy that would still exist in the
transitional period, the basic principles of an inclusive democracy. Thus, a
certain shift in the tax load should take place, away from taxing income and
towards taxing wealth, the occupation of land, the use of energy and
resources, as well as activities creating environmental and social costs for
the community. The main goals of a demotic tax system should be:
• the financing of a programme for the municipalization of the local
productive resources, which would provide employment opportunities
for all citizens in the community;

290
FROM 'HERE' TO THERE'

• the financing of a programme for social spending that would cover the
basic needs of all citizens, in the form of a basic income (its size
depending on the citizen's income and wealth) guaranteed for every
citizen, irrespective of ability to work;
• the financing of institutional arrangements that would make democracy
in the household effective;
• the financing of programmes for the replacement of traditional energy
sources with local energy resources, especially natural energy (solar,
wind, etc.) which would minimize both the dependence of local
economies on outside centres, as well as the energy-related implications
on the environment; and
• the parallel economic penalization of the anti-ecological activities
of branches and subsidiaries of large corporations based in the
community.
So, the combined effect of the above measures will be to redistribute
economic power within the community, in the sense of greater equality in
the distribution of income and wealth. This, combined with the introduc-
tion of the democratic planning procedures (see p. 298), should provide
significant ground for the transition towards full economic democracy.
As regards the all-important power to determine production, compre-
hensive programmes should be designed that would contain concrete
proposals on the changes required in the economic structure of each
municipality, so that the objectives of an inclusive democracy may be
achieved. A transitional strategy towards greater self-reliance would in-
volve people in the community producing more for themselves and one
another, as well as substituting locally produced goods and services for
goods produced outside the community. Financial incentives may be
provided to local shopkeepers in order to induce them to stock locally
produced goods and to citizens to buy them. This, in turn, would
encourage local producers (farmers, craftsmen, etc.) to produce for and sell
at the local market, breaking the chains of big manufacturers and dis-
tributors.
However, the creation of demotic enterprises (i.e. enterprises owned by
the demos) in production or distribution would only have a political
significance, in this transitional stage towards an inclusive democracy, if
and only if they constitute part of a comprehensive political programme
towards radical social transformation. As Murray Bookchin put it in
connection with his Confederal Municipalism programme:

Removed from a libertarian municipalist context and political movement


focused on achieving revolutionary municipalist goals as a dual power against

291
TOWARDS AN INCLUSIVE DEMOCRACY

corporations and the state, food coops are little more than benign enterprises
that capitalism and the state can easily tolerate with no fear of challenge.31

It should be noted that the revival of local economy, in the context of


wider national and supranational entities, could play a decisive role, not
only in founding economic democracy but also in restructuring the
economically weaker regions. Only the lessening of the degree of depend-
ence of these regions on the metropolitan centres would allow the creation
of a new production and consumption model, compatible with the
economic potential of each region. For example, for a country like
Greece, the revival of local economies constitutes today the only way out
from the chronic economic crisis created by the historical failure of both
statism and private initiative to create a modern productive structure that
would be in a position to meet the country's basic needs without a large
part of the population, especially of the youth, being condemned to
unemployment and emigration. 32

Finally, a transitional strategy towards greater self-reliance should in-


volve the creation of a demotic welfare system, i.e. a welfare system controlled
by the demos. The shift to municipalities of important social services
(education, health, housing, etc.) is particularly important today when the
welfare state is in ruins and is being gradually replaced by safety nets for the
very poor and the parallel enhancement of private provision with respect
to basic needs. The use of local productive resources in these services
should be maximized, both in order to provide local employment and
create local income and, also, to drastically reduce outside dependence.
However, a comprehensive demotic welfare system that involves the
provision of social services at higher levels (tertiary education, big hospi-
tals, etc.) could only be established with the co-operation of several
municipalities and could be the basis for a confederal welfare system. A
demotic welfare system will not only be less prone to bureaucratization but
will also provide a much more effective mechanism than the state welfare
system, as a result of its smaller size and its easier management by citizens
with full knowledge of the local problems. Furthermore, as the municipal-
ization of social services will be part of a programme to enhance individual
and social autonomy, the effect will not be the creation of a new
dependency culture.

The transition to a 'demotic' economy


The creation of a demotic economic sector is a crucial step in the transition
to an inclusive democracy, not only because of its importance with respect
to economic democracy but also because the establishment of self-
managed productive units constitutes the foundation for workplace de-

292
FROM 'HERE' TO THERE'

mocracy. A demotic sector would involve new collective forms of owner-


ship that would ensure control of production, not only by those working
in the production units, but also by the demos. The productive units could
belong to the demos and be managed by the workers working in those
units, while their technical management (marketing, planning, etc.) could
be entrusted to specialized personnel. However, the overall control of
demotic enterprises should belong to the community assemblies which
would supervise their production, employment and environmental
policies. For instance, as a step in the transition to an economic democracy,
community assemblies could decide to reduce drastically the wage differ-
entials of people employed in demotic enterprises.
Hence, the new forms of organization of production and collective
ownership would not only create the preconditions for economic democ-
racy, but also enhance the 'general social interest'. This is in contrast to the
partial interest that inevitably is being pursued by the social classes and
groups of the hierarchically organized social systems. Therefore, the
answer to the economic failure of socialist enterprises is not the neoliberal
(with social-democratic connivance) privatization of them but their mu-
nicipalization. The establishment of a series of demotic enterprises that
belong to and are controlled by the demos (through the community
assemblies) in collaboration with the people working in them (through the
workplace assemblies) would create local employment opportunities and
expand local income under conditions that secure:
• economic democracy in the sense of democratic participation in the
running of these enterprises;
• workplace democracy with no institutionalized hierarchical structures;
• security of employment; and
• ecological balance.
The two significant questions that arise with respect to the municipali-
zation of the economy in the transitional period are, first, how to establish
such demotic enterprises and, second, how to run them until they become
parts of a full economic democracy.
As regards the question of establishing demotic enterprises, this could be
achieved by a combination of methods. Some may be used even before
supporters of an inclusive democracy programme take over a municipality.
Community Land Trusts, for instance, are a useful way of raising finances for
the purchase of land to be held collectively, by using the value of the land
itself as security. Such trusts have already been used in several places in
connection with community development. 33

Other measures can only be taken up effectively after the successful

293
TOWARDS AN INCLUSIVE DEMOCRACY

contestation of local elections. Thus, an important step in the establish-


ment of a demotic economic sector is the creation of a network of demotic
bank co-operatives, similar, for example, to the very successful Basque
network of the Caja Laboral Popular in Spain, which supports the
34

Mondragon co-ops. In Spain, this network is not owned by the muni-


cipalities and was set up by the people involved in the creation of the co-op
movement - a procedure which raises serious objections as regards the
desirability of such a scheme but also as regards its feasibility outside the
strongly nationalist Basque community of Mondragon. A more feasible
and desirable way may be for the municipalities which are controlled by
supporters of inclusive democracy to establish a municipality-owned and
controlled bank network. Thus, each municipality could have its own
demotic bank that could be integrated into a regional and later a confederal
network. Such a network could be used:
• to absorb local savings that would be attracted to the network by the fact
that savers would be able to control the character of its investment
activities. This control would be exercised by the community assem-
blies, in collaboration with the bank employees' assemblies, to ensure
that savings will be channelled to projects aiming at local development,
maximization of local employment, limitation of the environmental
effects of production, etc.;
• to finance investments in modern production units which have as their
goal the local creation of social wealth and the consequent lessening of
the local economy's dependence on outside centres. So, the proceeds of
local taxation would be used not just for the financing of infrastructure
projects and local social services but also for the financing — through the
network of demotic banks - of investment in new (or the purchase of
old) production units to be included in the demotic sector of the
economy. Most of the initial capital to establish the demotic enterprises
would therefore have to come from the community savings which,
through the demotic bank network, would be lent to groups of citizens
who wished to establish community co-ops; and
• to offer other specialized services that would allow the establishment and
running of these demotic enterprises by any interested social group in
the community, which would not necessarily possess the required
specialized knowledge (e.g. workers of bankrupt companies, unem-
ployed, low-waged people, etc.). In any case, decentralization of
information today is widely spread. For example, in Emilia-Romana,
Italy, a whole network has been developed with centres which offer
specialized services to the small enterprises (from marketing to industrial
research, etc.), while in Japan, with the Kohsetsushi system, each city has

294
FROM 'HERE' TO THERE'

its own centre of research and applied technology for small enter-
prise.35

The demotic bank could undertake research on the type of production


units to be established in the local community. It is obvious that private
initiative could not undertake either the co-ordination of investment
programmes or the research work for the sectors in which the new units
should be developed, since this work demands a general knowledge of
economic data and needs. The fragmentary character of private investment
is, anyway, the basic cause of the uneven character of capitalist develop-
ment. The research, therefore, on the particular units towards which local
investments should be directed as well as on their geographical distribution
(that is the potential of local economies to undertake their materialization)
could be undertaken, in a first phase, by the research centres of the
network of demotic banks and, in a later stage, by the confederation of
communities. The criteria, however, to be used in this research pro-
gramme should not be the narrow technocratic economic criteria based on
efficiency, but alternative criteria which would aim at the maximization of
local employment and of local (and consequently of confederal) economic
self-reliance and productivity, as well as at the minimization of the effects
on the environment. So, a kind of social investment appraisal and social
accounting has to be introduced to evaluate particular investment pro-
posals, to monitor them and generally to evaluate social wealth creation.
That means that new economic indicators have to be used, on the basis of
the ones already being developed, in place of today's measures of welfare.
36

Finally, the demotic bank should provide specialized services on planning


the production layout, designing the factory, manpower training,
accounting systems, etc.
As regards the question of how these demotic enterprises should be run
in the transitional period, I think that forms of self-management, like the
Yugoslav type of co-op and the Employee Stock Ownership Plan (ESOP)
- the former bending towards state socialism and the latter towards the
market economy - should be excluded. In the Yugoslav system of self-
management, all capital investment was owned by the state rather than by
the enterprise itself. Workers, therefore, had no incentive at all to invest in
the capital base of the plant and, as a result, productivity suffered a lot. On
the other hand, in ESOP schemes, we have an indirect worker-ownership
system, based on an employee pension plan, rather than a workplace
democracy. Voting, for instance, is based on stock held by employees and
not on the democratic one-person-one-vote formula. The whole system
therefore results in a perfect capitalist stock company, and the only

295
TOWARDS AN INCLUSIVE DEMOCRACY

difference from other companies is that this scheme turns workers into
share-owning capitalists.
The demotic enterprises should neither recreate the bureaucratic struc-
ture of socialist co-ops nor should they be indistinguishable from capitalist
firms. Thus, apart from ownership (which belongs to the demos rather than
to capitalists or the state), the whole structure and functioning of the
enterprises should be different from both capitalist and state socialist firms.
There should therefore be as much decentralization as possible, both to
avoid their bureaucratization and to secure as much autonomy as possible
for the people working in them, within the constraints set by the
community objectives.
Thus, decentralization of decision-making, within the framework of
community-owned but independently run co-ops, is perhaps the best
solution. In other words, the community assembly could determine social
and ecological targets that the demotic enterprise would have to achieve
(e.g. the proportion of revenue set aside for the achievement of the
community's social and ecological goals, ecological standards to be main-
tained, security of employment, etc.), whereas the enterprise itself could
be run like, for example, a Mondragon co-op — with some significant
adjustments that would make its structures democratic. One possible way
to achieve this high degree of decentralization in decision-making would
be, for instance, for the community assemblies to lease the demotic
enterprises to employees' collectives.
As regards the management structure in particular, the problem is
usually set in terms of a conflict between managerial efficiency and
employee democracy. In the Mondragon type of co-op, the emphasis is on
efficiency rather than on democracy, with a limited role played by the
General Assembly, which elects only one-third of the members of a
Supervisory Board that, in turn, elects the managers. The managers
effectively run the enterprise. The General Assembly of workers meets no
more than once or twice per year. In a modified version, the General
Assembly could elect half the members of the Supervisory Board, to
express the employees' interest, whereas the other half could be elected by
the Community Assembly, to express the general interest of the commu-
nity. The members of the Supervisory Board should be people with
specific knowledge of the type of production activity involved (to be able
effectively to supervise the managers) and should be recallable by the
respective assemblies. The Supervisory Board would in turn elect and
supervise the managerial staff, which would consist of people with special-
ized knowledge on the line of activity involved. Their authority would
therefore originate in their knowledge, which implies that no hierarchical
power, other than the influence derived from their knowledge, would be

296
FROM 'HERE' TO THERE'

tolerable against the rank and file. Finally, the workplace assembly, which
should meet much more frequently than the Mondragon General Assem-
bly, would determine which decisions would be taken by itself and which
ones would be delegated to the Supervisory Board and the managers so
that efficiency and democracy could be in balance.
However, it should not be forgotten that this type of demotic enterprise
is useful only for a transitional period, until the economy is fully munici-
palized. This is so because it suffers from a serious drawback: despite the
suggested amendments to satisfy the general interest, the very fact that, in
a market economy system, these units would be under steady competitive
pressure by capitalist firms means that the particular interest of the
employees would tend to transcend the general interest of the community.
That is why a community spirit is an important precondition for the
creation and social functioning of these co-ops; members therefore of
demotic enterprises should be bearers of such a community spirit. Another
important problem with respect to demotic enterprises is that they may not
be able to survive competition, especially from capitalist firms enjoying
large economies of scale and significant productivity differentials. I think,
however, that this problem will lose a significant part of its importance in
a self-reliant economy, where demotic enterprises direct their production
activity mainly to the local market. This is particularly so if we take into
account that the social responsibility and satisfaction that self-reliance and
democratic control enhance are guarantees of product quality. Further-
more, one could expect that the new political and economic institutions
would create a new consciousness which will make citizens more resistant
to pure financial incentives.
Finally, an important condition that would differentiate demotic enter-
prises from the Mondragon-type of co-ops and turn them into truly
transitional production units in the move to an inclusive democracy is that
they should produce exclusively for the local market, with the use of local
resources. If instead, they start producing for the broad market outside the
community, as for instance the Mondragon co-ops are doing at the
moment, then a process would be initiated that would end with their
absorption into the market economy, even if formally they were still called
co-ops. Thus, in the Mondragon case, as even an enthusiastic supporter of
them observes, the competitive pressures created by Spain's integration
into the EU have led to 'strengthening the integration of co-op groups to
make them more competitive with transnational competitors, expanding
the highly successful retail co-op system beyond the Basque region in joint
ventures with other co-ops and with non-profits that may not allow
workers to become members immediately, increasing the maximum wage

297
TOWARDS AN INCLUSIVE DEMOCRACY

differential within co-ops to attract skilled technicians and managers' 37

etc.
It is therefore obvious that for demotic enterprises to be successful they
should be part of a comprehensive programme to municipalize the
economy - in other words, a programme whose constituent elements are
self-reliance, demotic ownership and community allocation of resources.
The aim of this process is to gradually shift more and more human and
non-human resources away from the market economy into the new
'demotic' economy that would form the basis of an inclusive democracy.
At the end of this process, the demotic enterprises would control the
community's economy and would be integrated into the confederation of
communities, which could then buy or expropriate privately owned big
enterprises.

The transition to a confederal allocation of resources


The fundamental problem of the strategy leading to a confederal allocation
of resources is how to create such institutional arrangements for economic
democracy that are compatible with an institutional framework that is still
a market economy. As the confederal allocation of resources was described
in the previous chapter, the system involves two basic mechanisms for the
allocation of resources: (a) a democratic planning mechanism for most of
the macro-economic decisions; and (b) a voucher system for most of the
micro-economic decisions. The voucher system, in effect, creates condi-
tions of freedom of choice, by replacing the real market with an artificial
one. It is obvious that the voucher system cannot be introduced until a full
economic democracy in the form of a confederation of communities has
been introduced, although steps in this direction could be taken earlier, as
we saw above. However, a democratic planning system could be in-
troduced even in the transitional period although, obviously, its decision-
making scope would be seriously constrained by the market economy.
Still, it could play a useful role in educating people in economic democ-
racy and at the same time in creating the preconditions for individual and
social autonomy.
But, for any democratic mechanism to be significant and to attract
citizens in the decision-taking process, it is presupposed that the decisions
themselves are important. The case of classical Athens shows that, as long
as this condition is met, it is perfectly feasible to attract thousands of people
to exercise their civic rights. Thus, as Hansen observes, 'The level of
political activity exhibited by the citizens of Athens is unparalleled in
world history, in terms of numbers, frequency and level of participation . . .
an Assembly meeting was normally attended by 6000 citizens (out of
30,000 male citizens over eighteen), on a normal court day some 2000

298
FROM 'HERE' TO 'THERE'

citizens were selected by lot and besides the 500 members of the Council
there were 700 other magistrates.' It is therefore crucial that during the
38

transition to an inclusive democracy the demos should be empowered with


significant powers that would convert it into a coherent system of local
taxation, spending and finance. Then, community assemblies (or neigh-
bourhood assemblies, in big cities, confederated into community assem-
blies) could be empowered to make decisions affecting the economic life
of the community, which would be implemented by the Town Council
or other relevant body, after it has been converted into a body of recallable
delegates.
Thus, the shift of tax power to the municipalities, which should be a
basic demand of a democratic movement, would allow community
assemblies to determine the amount of taxes and the way in which taxes
would be charged on income, wealth, land and energy use, as well as on
consumption. Community assemblies could, at annual intervals, meet and
discuss various proposals about the level of taxation for the year to come,
in relation to the way the money collected by the municipality should be
spent. This way, community assemblies would start taking over the fiscal
powers of the state, as far as their communities are concerned, although in
the transitional period, until the confederation of communities replaces
the state, they would also be subject to the state fiscal powers.
Similar measures can be taken as regards the present state powers with
respect to the allocation of financial resources. The introduction of a
demotic banking system, in combination with demotic currencies, will
give significant power to community assemblies to determine the alloca-
tion of financial resources in the implementation of the community's
objectives (creating new enterprises, meeting ecological targets, etc.)
Finally, assemblies would have significant powers in determining the
allocation of resources in the municipalized sector of the community,
namely, the demotic enterprises and the demotic welfare system. As a first
step, community assemblies could introduce a voucher scheme with
respect to social services. At a later stage, when a significant number of
communities have joined the confederation of inclusive democracies,
community assemblies could expand the voucher system to cover basic
needs of all citizens, at the beginning, in parallel with the market economy
— until the latter is phased out.
In concluding this chapter, nobody should have any illusions that the
implementation of a transitional strategy to economic democracy will not
receive a hard time from the elites controlling the state machine and the
market economy. However, as long as the level of consciousness of a
majority in the population has been raised to adopt the principles included
in a programme for an inclusive democracy — and the majority of the

299
TOWARDS AN INCLUSIVE DEMOCRACY

population has every interest in supporting such a programme today — I


think that the above proposals are perfectly feasible, although of course
there may be significant local variations from country to country and from
area to area, depending on local conditions. Without underestimating the
difficulties involved in the context of today's all-powerful methods of
brain control and economic violence which, in fact, might prove more
effective methods than pure state violence in suppressing a movement for
an inclusive democracy, I think that the proposed strategy is a realistic
strategy on the way to a new society.

Notes
1. Peter Marshall, Nature's Web, an Exploration of Ecological Thinking (London:
Simon & Schuster, 1992).
2. See, for instance, David Pepper, Eco-Socialism: From Deep Ecology to Social
Justice (London: Routledge, 1993), p. 199.
3. For a graphic description of the recruitment of private guards from the
underclass to 'deal' with the Green activists protesting against the partial
destruction of a forest so that the Newbury bypass could be constructed in
Britain, see John Vidal, The Guardian (25 Jan. 1996).
4. See Ted Trainer, The Conserver Society: Alternatives for Sustainability (London:
Zed Press, 1995).
5. Ted Trainer, The Conserver Society, p. 220.
6. Murray Bookchin, 'Libertarian municipalism: an overview', Society and
Nature, Vol. 1, No. 1 (1992) p. 102.
7. Murray Bookchin, 'Communalism: the democratic dimension of anar-
chism', Democracy and Nature (formerly Society and Nature), Vol. 3, No. 2
(1996).
8. Murray Bookchin and Dave Foreman, Defending the Earth, A Debate Between
Murray Bookchin and Dave Foreman (Montreal: Black Rose Books, 1991), pp.
61-2.
9. Murray Bookchin, 'Libertarian municipalism: an overview', p. 102.
10. David Pepper, Eco-Socialism, p. 200.
11. Roy Morrison, Ecological Democracy (Boston: South End Press, 1995), p.
25.
12. Roy Morrison, Ecological Democracy, pp. 8—9.
13. Roy Morrison, Ecological Democracy, p. 25.
14. Roy Morrison, Ecological Democracy, p. 9.
15. See Janet Biehl's book review of Kirkpatrick Sale, Rebels Against the Future:
The Luddites and Their War on the Industrial Revolution, Lessons for the Computer
Age (Reading, MA: Addison-Wesley, 1995) in Green Perspectives, No. 36
(Feb. 1996), p. 8.
16. Roy Morrison, Ecological Democracy, p. 12.
17. Roy Morrison, Ecological Democracy, pp. 138-40.
18. Roy Morrison, Ecological Democracy, pp. 14—15.
19. Roy Morrison, Ecological Democracy, p. 22.
20. Roy Morrison, Ecological Democracy, p. 144.
21. Roy Morrison, Ecological Democracy, p. 161.

300
FROM 'HERE' TO THERE'

22. Takis Fotopoulos, 'The economic foundations of an ecological society',


Society and Nature, Vol. 1, No. 3 (1993).
23. David Pepper, Modern Environmentalism (London: Routledge, 1996), p.
321.
24. Howard Hawkins, The Greens Bulletin (April 1992), pp. 27-30.
25. Murray Bookchin, Post-Scarcity Anarchism (London: Wildwood House,
1971), p. 217.
26. Cornelius Castoriadis, Philosophy, Politics, Autonomy (Oxford: Oxford
University Press, 1991), p. 204.
27. See Murray Bookchin, 'The ghost of anarcho-syndicalism', Anarchist Studies,
Vol. 1, No. 1 (Spring 1993).
28. I would mention, indicatively, the significant works on the subject by James
Robertson; see, e.g., his article 'Economics of local recovery' in Society and
Nature, Vol. 1, No. 1 (1992), and his book Future Wealth (London: Cassell,
1989), Ch. 5. See also Paul Ekins, Trade for Mutual Self-Reliance, (London:
TOES Publication, 1989), Local Economic Self-Reliance (London: TOES
Publication, 1988);Johan Galtung's contribution in The Living Economy, Paul
Ekins (ed.) (New York: Routledge & Kegan Paul, 1986), pp. 97-109; and C.
George Benello et al, Building Sustainable Communities (New York: Boot-
strap, 1989), Chs 18-20.
29. See, for instance, the Homegrown Economy Project in the city of Saint Paul,
Minnesota, mentioned by James Robertson, which uses a number of
comprehensive criteria to enhance the local economy in the process of
founding new enterprises and supporting old ones (J. Robertson, Future
Wealth (London: Cassell, 1989), p. 43) and similar experiments in Bologne,
Bremen, etc., which I have mentioned elsewhere, for example, Eleftherotypia
(22 Sept. 1990).
30. See for a description of the LETS system, Ross V.G. Dobson, Bringing the
Economy Home from the Market (Montreal: Black Rose, 1993).
31. Murray Bookchin, 'Comments on the international social ecology network
gathering and the "deep social ecology" of John Clark', Democracy and Nature
Vol. 3, No. 3 (1996).
32. Takis Fotopoulos, Dependent Development: The Case of Greece (Athens: Ex-
antas Press, 1985 and 1987).
33. For instance, in Australian aboriginal communities, but also in the UK where
a self-planned, self-built settlement was developed in Shropshire. For further
developments on the Community Land Trusts, see C. George Benello et al.,
Building Sustainable Communities, Part 1.
34. See M.A. Lutz and K. Lux, Humanistic Economics (New York: Bootstrap,
1988), pp. 263-8.
35. See Will Hutton, The Guardian (1 June 1992).
36. See, e.g., V. Anderson's Alternative Economic Indicators (New York: Rout-
ledge & Kegan Paul, 1991).
37. Roy Morrison, Ecological Democracy, p. 154.
38. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes
(Oxford: Blackwell, 1991), p. 313.

301
PART III

Towards a Democractic
Rationalism
CHAPTER 8

How Do We Justify the Project for


an Inclusive Democracy?

In this chapter, the foundations of 'objectivity' in both its positivist and


dialectical versions will be examined, and the feasibility, as well as the
desirability, of grounding the project for an inclusive democracy on an
'objective' theoretical system will be questioned. The question that arises
here is whether there is in fact a genuine dilemma in attempting to justify
the democratic project, a dilemma that forces us to choose between either
a modernist 'objectivist' approach or a post-modernist subjectivist
approach.
The choice of the former implies that, following the modernist tradition,
in order to justify the need for an inclusive democracy, we have to rely on
objective theories and methods, i.e. on procedures that are valid, irrespective
of our expectations, wishes, attitudes and ideas. The implicit argument in
favour of such an approach is that such theories and methods reflect in fact
'objective processes' at work in society or the natural world. However, as
I will try to show in this chapter, the choice of an 'objectivist' method to
justify the need for an inclusive democracy is both problematic and
undesirable. It is problematic because few still believe today, after the
decisive introduction in twentieth-century science of the uncertainty
principle and chaos theory, that it is still possible to derive any 'objective'
laws or 'tendencies' of social change. If cause and effect can be uncertain
even in physics, the most exact of sciences, and the reference to necessary
and universal laws is disputed even with respect to the natural world, it is
obvious that postulating objective laws or tendencies that can be applied to
society is absurd: It is undesirable because, as the case of the socialist project
has shown, there is a definite link between the 'scientification' of that
project in the hands of Marxists-Leninists and the consequent bureau-
cratization of socialist politics and the totalitarian transformation of social
organization.
But, if modernist objectivism seems problematical and undesirable, this
does not mean that post-modernist subjectivism is less problematical, as it

305
TOWARDS AN INCLUSIVE DEMOCRACY

may easily lead to general relativism and irrationalism, if not to complete


abandonment of radical politics. Thus, adopting the post-modern
'generalized conformism', in effect, implies the abandonment of any idea
1

of a liberatory project under the (miserable) pretext of letting 'polyphony'


flourish and under the (right) banner that 'politics, rightly understood, is
firmly subjective'. 2

My aim in this chapter is to attempt to show that the above dilemma is,
in fact, a false one. Today, it is possible to define a liberatory project for an
inclusive democracy without recourse to controversial objective grounds
or to post-modern neo-conservatism. If we define freedom and the
liberatory project in terms of the demand for social and individual
autonomy, as we did in Chapter 5, we do so because we responsibly
3

choose autonomy, as well as its expression in democracy, and we explicitly


rule out the possibility of establishing any 'objective' laws, processes or
tendencies which, inevitably, or 'rationally', lead to the fulfilment of the
autonomy project. However, once we have chosen, broadly, the content
of the liberatory project, some definite implications follow regarding our
interpretation and assessment of social reality. In other words, the very
definition of a liberatory project conditions the 'way of seeing' and
criticizing social reality.
In the first part of this chapter, the claim of objectivity of the 'orthodox'
epistemological tradition (empiricism/positivism and rationalism) is
questioned, at least as far as the interpretation of social reality is concerned.
The decisive influence of power relations in the interpretation of social
phenomena is reflected in the much lower degree of intersubjectivity that
characterizes social versus natural sciences. Next, the objectivity claim of
the alternative tradition, dialectics, is considered with respect to two major
applications in the interpretation of social reality, dialectical materialism
and dialectical naturalism, and it is concluded that it is neither feasible nor
desirable to derive a general theory of social 'evolution' on the basis of an
'objective' interpretation of social or natural history. Finally, in the last
section it is argued that the liberatory project for an inclusive democracy
can only be based on a democratic rationalism which transcends 'scientism'
and irrationalism as well as general relativism.

The myth of objectivity: orthodox 'objectivity'


The first question arising in any attempt to 'objectivize' an interpretation
of social reality refers to the methodology used in this process. The term
'methodology' is taken here in the broad sense of the philosophy of science
— as an investigation of the concepts, theories, assumptions and criteria of
assessing them. The concerns with methodology have, of course, a long
history in the debates between orthodox social scientists on the one hand

306
JUSTIFYING AN INCLUSIVE DEMOCRACY

and Marxist theorists on the other, and it has recently reappeared,


explicitly or implicitly, in the debates within the Green movement. Thus,
it can be shown that significant disagreements between various streams in
the Green movement are due to methodological differences with respect
to the way 'reality' is seen. Such differences sometimes make even the very
communication between the Green currents extremely difficult, if not
impossible (see, e.g., the debate between social ecologists and deep
ecologists). It is therefore of crucial importance to clarify the methodo-
logical issues involved in the current debates.
Any attempt to objectivize the interpretation of social reality either
takes the existing socio-economic order for granted, implicitly aiming at
the justification of its reproduction (as 'orthodox' social 'scientists' do) or
discards it, explicitly aiming at drastic social transformation (as radical
theorists do). For reasons that I will develop later in this chapter, it can be
shown that the concepts of objectivity developed within the two main
traditions in the philosophy of science, the empiricist/positivist tradition
and the dialectical one, have an intrinsic relationship to the above aims of
social analysis. The conception of objectivity developed by empiricists/
positivists (orthodox 'objectivity') is most amenable to a kind of 'objective'
interpretation of social reality that takes the existing social-economic
system for granted, and, vice versa, the conception of objectivity
developed by dialectical philosophers (dialectical 'objectivity') is most
suited to an effort to justify a radical transformation of society.
An immediate question which arises here is whether dialectics can be
seen as a 'method'. Dialectical philosophers like Murray Bookchin dis-
agree with the conception of dialectics as a method on the grounds that 'it
distorts the very meaning of dialectic to speak of it as a "method" [since]
it is an ongoing protest against the myth of "methodology": notably that
"techniques" for thinking out a process can be separated from the process
itself'.
4

However, even if we see the dialectical approach principally as an


ontological logic, this does not negate the fact that this approach, in
assessing the truth value of theories, does use a set of concepts, categories
and criteria which are very different from those used by positivists and that,
in this sense, it is also a method. Furthermore, the very fact that, even
today, contemporary dialecticians in very different traditions (e.g. Marx-
ism and social ecology) use the dialectical approach to elucidate the same
realm of reality (social evolution) and in the process derive very different
conclusions at the interpretational and ethical levels is a clear indication
that dialectics is being used and as a method.
Coming now to the orthodox epistemological tradition, the main
streams in this tradition are rationalism and empiricism/positivism with its

307
TOWARDS AN INCLUSIVE DEMOCRACY

later versions of falsificationism and 'scientific research programmes'. A


brief outline of these currents in the orthodox tradition may be useful in
understanding the methodological differences among various schools of
social thought in their endeavour to interpret social reality.

Rationalism versus empiricism/positivism


Rationalism mainly flourished in continental Europe (Descartes, Spinoza,
Leibniz, Wolff et al), whereas empiricism (Bacon, Hume, Berkeley), with
its descendants of positivism (classical and logical) and falsificationism, has
always been dominant in Britain and the USA. Rationalists as well as
empiricists share a common pursuit of certainty in knowledge, that is, of
truths that are certain because they are necessary. It is for this reason that in
both traditions it is possible to speak of proof. Still, rationalists and
empiricists differed between themselves, both as regards the source of truth
and as regards the procedure to be employed in grounding knowledge on
these truths. Rationalists find the source of truth in 'reason', whereas
empiricists/positivists find it in sense-data, the 'facts'.
These differences, in turn, reflect different theories of truth. Thus,
rationalism reflects a coherence theory of truth, according to which the
3

criterion of truth is coherence with other propositions or judgements,


something consistent with the deductive method of analysis. The founda-
tion for this criterion of truth is the belief in the impossibility of developing
a 'neutral' language, that is, a language not dependent on a particular
theoretical system or conception of reality. Therefore, as there is no
neutral way of comparing reality with out judgements, all that we can do
is to compare one set of judgements with others. Knowledge, in other
words, is conceptually mediated, and objectivity can only be established
within a particular conceptual framework. This has two important im-
plications. First, the incommensurability of rival theories, as well as their
inferences, is the consequence of different assumptions/axioms used.
Second, that any selection among such theories is based eventually on
non-scientific criteria.
So, there is no objective way of demonstrating the superiority of one
theoretical system (in explaining reality) over another when both systems
are internally consistent and coherent. If, for instance, both the Marxist
and the neo-classical theories of value can be shown to be internally
consistent and coherent, then there is no 'objective' way to demonstrate
the superiority of one over the other. For rationalists, therefore, knowl-
edge of the world inevitably involves a priori truths, namely, truths which
are not inductive generalizations from experience, but are virtually innate
and, therefore, in no need of empirical confirmation. By pure reasoning,

308
JUSTIFYING AN INCLUSIVE DEMOCRACY

rationalists argue, we can arrive at substantial knowledge about the nature


of the world, through the use of concepts and propositions, where the
connection between subject and predicate is necessary. The rationalists'
ideal was 'a deductive system of truths, analogous to a mathematical
system, but at the same time capable of increasing our factual information
. . . a system of deducible truths [that] can be considered as the self-
unfolding of the reason itself'.6

It was in reaction to rationalism's a priori and subjective character of


knowledge that the alternative tradition of empiricism developed. Empiri-
cism reflects a completely different theory of truth, a correspondence
theory, according to which the criterion of truth is correspondence with
fact, although, as modern versions of the theory have shown, it is certainly
not always the case that every statement can be correlated with a fact. 7

Experience therefore becomes the necessary basis for all our knowledge,
and as factual knowledge is based on perception, we cannot obtain factual
knowledge by a priori reasoning. All a priori propositions are analytic ones
(where the concept of the predicate is contained in the concept of the
subject) true by definition, so that their denial involves a contradiction. As
such, they do not claim knowledge of the world, they are not truths about
matters of fact. On the other hand, all synthetic propositions (where the
predicate is not contained in the subject) are a posteriori; i.e. the connec-
tion between subject and predicate is not and cannot be necessary.
Still, not all synthetic propositions are a posteriori. Some are a priori,
independent of experience. Thus, as Kant first emphasized, concepts like
that of causality (the truth that every event has a cause) are necessary truths
and yet afford information about the world, in some sense quite independ-
ent of experience. More important, perception is not just an unconscious
process. As, for instance, Kuhn points out, perception itself, though
8

unconscious, is conditioned by the nature and amount of prior experience


and education. There are therefore no 'brute facts': all facts are theory-
laden, and perception is always concept-dependent. But, as any mean-
ingful talk about knowledge founded on sense-data presupposes that
language is neutral, the lack of such a language implies that the empiricist
position is untenable, since sense-data are not independent of our knowl-
edge of the world.
However, in spite of the attacks by rationalists, Kantians/neo-Kantians,
Marxists, relativists and others, empiricism, in its various forms, has
become the dominant epistemology among orthodox social scientists — a
process that was helped enormously by the success of natural sciences and
the corresponding rise of scientism. It was, in particular, during the
emergence of what could be called the 'scientific-industrial complex' that

309
TOWARDS AN INCLUSIVE DEMOCRACY

Comte's philosophy of (classical) positivism — the next step in the evolu-


tion of empiricism - began dominating social sciences. Comtean positiv-
ism introduced the well-known fact/value dichotomy, a dichotomy to be
used widely by orthodox social scientists in their effort to develop a
neutral, 'value-free' science of the economy, or society in general. Still, the
introduction of the fact/value dichotomy, far from creating the conditions
for a 'value-free' science of society, not only helped enormously in
creating the myth of scientific 'objectivity' but, also, as Murray Bookchin
observes, denied speculative philosophy the right to reason from the 'what
is' to the 'what-should-be', i.e. its right to become a valid account of
reality in its 'truth'.
9

Orthodox social scientists were helped enormously in their effort to


develop a 'science' of the economy and society by two parallel develop-
ments: first, the advent of logical positivism and, second, significant
advances in the theory of testing hypotheses in the 1930s and 1940s that
made possible the application of empirical testing procedures in the study
of social phenomena, i.e. phenomena that, by nature, are not subject to
experiment. In fact, logical positivism, which became dominant in the
orthodox philosophy of science at about the same time that the develop-
ments in statistics were taking place, explicitly asserted the doctrine of
methodological monism, that is, that all sciences, natural or social, could and
should use the same method.
Logical positivism, initially expressed by a group of philosophers —
subsequendy known as the Vienna Circle - which included M. Schlick,
R. Carnap and others, claimed to produce a synthesis between the two
epistemological traditions, that is, between the deductive and a priori
rationalism on the one hand, and the inductive and a posteriori empiricism
on the other. Still, logical positivism is more firmly founded in the
emperical tradition, as is obvious from the fact that its main theses are well
within the empiricist tradition. This applies, in particular, to the thesis that
a theory must be verifiable to be scientific, namely, that it must not contain
metaphysical statements and value judgements. It also applies to the thesis
that the primary source of knowledge is considered to be (once more)
observation, or sense-experience; reason is merely mediating as a logical
check on the coherence between hypotheses and their implications.
However, although logical positivism, by insisting on verifiable truths,
definitely represented an improvement and, at the same time, a retreat,
with respect to the extreme empiricist position of a belief in proven truths,
it still suffered from serious weaknesses. I would mention here just three of
the criticisms raised against it. Thus, first, the Carnapian proposition, that
although scientific theories are equally unprovable, still, they have differ-
ent degrees of probability relative to available evidence, was shown by Karl

310
JUSTIFYING AN INCLUSIVE DEMOCRACY

Popper to be untenable on the grounds that under very general conditions,


all theories, whatever the evidence, can be shown to be not only equally
unprovable, but, also, equally improbable. Second, as there is no specifi-
10

cation whatsoever of the number of tests a theory has to pass in order to be


verified, the question arises as to how we know that the regularity
established today will also be valid tomorrow. Finally, as Katouzian points
out, the two most important criteria of logical positivism (verifiability/
verification) are normative (as they have not been verified themselves) and
normative statements, according to the principles of logical positivism, are
simply tautologies. Logical positivism, therefore, far from providing an
objective methodology, became an ideology 'inhibiting the growth of
knowledge and serving the interest of the status quo'. 11

Falsificationism and scientific research programmes (SRP)


The weaknesses of logical positivism led to another version of empiricism,
falsificationism, which represents a further retreat from the original
empiricist position. The demarcation criterion of what is scientific now
changes from verifiability/verification to falsifiability/falsification. It is
therefore explicitly recognized that theories are equally unprovable/
improbable, but, still, they may not be equally disprovable: a finite number
of observations can disprove a theory, so that empirical counter-evidence
becomes the one and only arbiter in assessing a theory. However, even this
further retreat from empiricism did not produce a tenable thesis. Sophisti-
cated falsificationists (like Karl Popper in his later writings, Lakatos and
others) rejected this form of 'dogmatic falsificationism', as they called it,
on the basis that it rested on false assumptions and a too narrow demarca-
tion criterion between scientific and non-scientific.
The false assumptions were, first, that we can distinguish between
theoretical and factual propositions. Such an assumption, however, is
based on the belief that non-theory-laden facts do exist. Second, that
propositions satisfying the criterion of being factual are true - an assump-
tion implying that factual propositions can be proved from an experiment.
But as Lakatos emphasizes: 'We cannot prove theories and we cannot
12

disprove them either; the demarcation criterion between the soft, un-
proven "theories" and the hard proven "empirical basis" is non-existent:
all propositions of science are theoretical and incurably fallible.' Finally,
the falsificationist demarcation criterion is so narrow that it would leave
out of science the most admired scientific theories, which can easily be
shown to be neither provable nor disprovable. Thus, as Lakatos pointedly
noticed, acceptance of the falsificationist criterion would mean that all
probabilistic theories, together with Newton's, Maxwell's and Einstein's

311
TOWARDS AN INCLUSIVE DEMOCRACY

theories, would have to be rejected as unscientific, since no finite number


of observations could ever disprove them. 13

The next development in the empiricist/positivist tradition was the


Lakatosian approach of Scientific Research Programmes (SRP), which
were defined as sets, first, of hard-core hypotheses or propositions that are
not subject to the falsification process and, second, of less fundamental
auxiliary hypotheses forming a 'protective belt' around this core, which
are the proper object of testing and amendment. Lakatos, starting from the
position that scientific theories are not only equally unprovable/
improbable but also equally undisprovable, attempted to provide some
scientific standards (a demarcation criterion) which, though founded again
on some sort of empirical basis, still, would not be subject to the
inflexibility characterizing 'dogmatic' or 'naive' falsificationism. Thus, he
changed the demarcation criterion so that the empirical basis was no
longer required to prevent the disproval of a theory, but just to make
possible its rejection. A theory may therefore be falsified and still remain
true. Also, a non-falsifiable theory can now become falsifiable by specify-
ing certain rejection rules in advance. That would allow probabilistic
theories back into the scientific fold, provided the scientist specifies the
rejection rules that would render the statistical evidence found inconsistent
with the theory. Finally, whereas for the 'naive' falsificationist any theory
which can be interpreted as experimentally falsifiable is acceptable/
scientific, for Lakatos, a theory, or, better, an SRP, is acceptable/scientific
if it has corroborated excess empirical content over its rival, that is, if it
leads to the discovery of novel facts.
Lakatos therefore claimed that he had solved the problem of objective
criteria that so much bothered the orthodox philosophy of science. An
SRP, including its untestable hard core, could be rejected, 'objectively',
using normal testing procedures. However, as Feyerabend points out, the
14

standards that Lakatos offered are, in fact, vacuous because they neither
specify any time limit over which the 'excess' empirical content of an SRP
should be verified, nor could they possibly do so, if return to naive
falsificationism was to be avoided. That is why, Feyerabend concludes,
Lakatos seems to retain these (supposedly permanent) standards, 'a verbal
ornament, a memorial to happier times when it was still thought possible
to run a complex and often catastrophic business like science by following
a few simple and "rational" rules'. 15

Objectivity versus intersubjectivity


It is clear that orthodox philosophers of science have failed to provide
criteria either of 'proven' truth (the truth of rationalists and classical
empiricists) or of 'provable/verifiable' truth (the logical positivists' truth)

312
JUSTIFYING AN INCLUSIVE DEMOCRACY

or even of truth based on permanent falsificationist standards (the Laka-


tosian truth). Therefore, as 'the requirements [for objectivity] were grad-
ually weakened until they disappeared into thin air', the 'Kuhnian
16

revolution' brought the power relation into orthodox epistemology


through the adoption of the relativistic position of 'truth by consensus'.
What is 'scientific' or 'objectively true' becomes a function of the degree
of intersubjectivity, that is, of the degree of consensus achieved among the
theorists in a particular discipline. Objectivity, of course, implies inter-
subjectivity, but the opposite is not true. Intersubjectivity simply means:
a common framework against the background of which people can commu-
nicate [so that] . . . what counts as fact depends on how we have come to see
the world and upon the conceptual structure that is presupposed in our seeing
it in this way. 17

All this brings us to the concept of 'scientific paradigm' that was


developed by Thomas Kuhn. The concept of paradigm has been used (and
abused) extensively in its 30-year history. Part, at least, of the blame for the
abuse can be attributed to the father of the concept himself since, as
Masterman observes, the term is used in Kuhn's book in at least 22
18

different ways! In its broadest sense, which is the most useful one for the
purposes of our discussion, paradigm refers to the 'entire constellation of
beliefs, values, techniques and so on shared by the members of a given
community'. Although Kuhn in his later writings, under pressure from
19 20

Popperians, Lakatos et al., seems to be retreating in his definition of the


scope of the paradigm concept and ends up with a narrower concept,
rather similar to the Lakatosian SRP, I believe it is the broad sense that is
the most original one. Anyway, this is the version that, as Blaug observes,
21

is predominantly retained by most readers of his book. In this broad sense,


the paradigm includes not only a theory, or even a set of theories, but also
a world view, a way of seeing the object of study, which in turn is
conditioned by the overall world view of scientists, i.e. the set of shared
beliefs about the individual's relationship to the natural world and to other
humans in society. Further, the concept contains a set of admissible
problems to be solved, as well as the methods to achieve legitimate
problem-solutions. A paradigm, in this sense, is a tradition. For example,
22

the eco-Marxist paradigm differs from the liberal-environmentalist one,


not just because each uses a different theory to explain the ecological
problems (and therefore suggests different solutions), but also because each
uses different methods (concepts, assumptions, criteria of assessing theo-
ries) — all these differences based, in the last instance, on different world
views.
It is therefore obvious that the paradigm concept, in its broad sense, is

313
TOWARDS AN INCLUSIVE DEMOCRACY

much broader than the Lakatosian SRP. This has very important implica-
tions with respect to the issue of objectivity criteria. As the very criteria for
assessing the paradigm-based normal scientific activity (the Lakatosian
protective belt) are part of the paradigm, any 'objective' comparison of
paradigms is impossible. Thus, as Kuhn puts it:
The choice between competing paradigms cannot be determined merely by the
evaluative procedures characteristic of normal science, for these depend in part
upon a particular paradigm and that paradigm is at issue. 23

This means that any incommensurability between paradigms, as a result


of differences about the list of admissible problems — due to different world
views — or about the methods to solve these problems and the criteria to
use in choosing between these methods, is an absolute one. People sharing
different paradigms 'live in different worlds', see different things or things
in a different relation to one another and can only shift from one paradigm
to another in gestalt-switch that converts them from adherents of one way
of seeing things to another. This is inevitable as soon as we accept that
there are no objective criteria which are not paradigm-dependent for
choosing among paradigms. Therefore, scientists (or theorists in general),
by adopting a paradigm, in fact adopt a 'package deal' consisting of
theories, facts that fit them, a world view and criteria to assess them. Thus,
the paradigm notion implies the non-existence of objectivity: there are
neither tradition-independent truths (a material notion of objectivity),
nor tradition-independent ways of finding truths (a formal notion of
objectivity). 24

In this paradigmatic view of science, the scientific 'maturity' of a


discipline and the amount of 'truths' produced by the respective scientific
community depend on the degree of intersubjectivity achieved among its
practitioners over a specific time period. The fact, therefore, that, histori-
cally, there is a crucial difference in the degree and type of intersubjectivity
that has been achieved among social and natural scientists is very important
with respect to the 'status' of their respective disciplines. Furthermore,
there is a very significant difference in the degree of success the two types
of science have historically enjoyed in explaining their object of study, that
is, social and natural phenomena, respectively. But these differences do not
arise out of 'exogenous' factors; they arise from the object of study itself—
a fact that has important implications for the question of whether the
liberatory project can be objectivized.
To illustrate these differences, let us take the example of economics,
which is considered to be the hardest 'science' among social sciences,
25

mainly because of its greater ability to quantify the relations it studies. For
more than 100 years after the publication of Das Capital, two economics

314
JUSTIFYING AN INCLUSIVE DEMOCRACY

paradigms, based on radically different world views and traditions, divided


the economics profession: the Marxist versus the 'orthodox' paradigm. I
make this division on the assumption that, despite the significant differ-
ences between the various schools of thought (especially those in the
orthodox camp, i.e. neo-classicals, Ricardians, Keynesians, monetarists,
etc.), still, there is a fundamental common characteristic in the respective
groups of theories: all orthodox theories take the market economy system
for granted, whereas all Marxist theories see capitalism as a historical phase
in the evolution of human society. Out of this fundamental difference arise
all other differences between orthodox and Marxist theories with respect
to concepts and methods to be used in the analysis of economic
phenomena.
One could possibly argue that the criteria that economic theorists used
in choosing between the two main paradigms were not mainly scientific.
In fact, it was social factors, that is, factors directly linked with their own
object of study (economy/society), that played a crucial role in this choice.
Thus, the institutional framework, within which economists functioned in
connection with their own social position and career ambitions, as well as
the way they perceive themselves in society, conditioned their social,
political and moral preconceptions. In other words, social factors, like the
ones mentioned, conditioned their world view, on the basis of which their
paradigm choice was made. As regards the institutional framework in
particular, it is not accidental that before the collapse of 'existing social-
ism', the dominant (i.e., the one most widely accepted) paradigm in the
Western and Eastern scientific communities used to be the orthodox and
the Marxist ones, respectively. After the collapse of these regimes, there
was a massive conversion of economists all over the world to the orthodox
paradigm. However, as the collapse itself has nothing to do with the
Marxist paradigm's analysis of the market economy, it is clear that the
present worldwide domination of the orthodox paradigm is unconnected
to any scientific criteria which supposedly demonstrate its superiority over
the competing Marxist paradigm, and it simply reflects the incommensur-
ability between the two paradigms and the lack of any scientific criteria to
choose objectively between them.
It is therefore obvious that the object of study plays a much more
important role in social than in natural sciences, with respect to determin-
ing the choice of a paradigm. This is due to the fact that the social theorist's
world view cannot possibly be separated from his object of study — society.
Furthermore, given the social divisions characterizing a hierarchical (or
heteronomous) society, there is an inevitable division among social theo-
rists, particularly with respect to the fundamental question of whether they
should take for granted the existing social system in their theoretical work.

315
TOWARDS AN INCLUSIVE DEMOCRACY

The fact that no similar inevitable division could arise among natural
scientists, combined with the possibility of experiment that is available in
the natural sciences, could go a long way towards explaining the much
higher degree of intersubjectivity that natural sciences have traditionally
enjoyed over social sciences in interpreting their object of study. Finally,
the above facts could easily explain why natural sciences are characterized
as more mature than social sciences. It is obvious that this is related to the
higher degree of intersubjectivity that can actually be achieved at a given
time and place among natural scientists compared to the relatively lower
degree of intersubjectivity that can potentially be achieved among social
scientists.

The myth of objectivity: dialectical Objectivity'


As is obvious from the above discussion, the orthodox philosophy of
science has been unable to solve what has been called the 'problem of
method', that is, the problem of establishing objective criteria in assessing
theories. Still, for those adopting the dialectical method of analysis, the
problem is non-existent, since, for them, 'techniques' for thinking out a
process cannot be separated from the process itself. A useful way of
introducing the dialectical approach would perhaps be to start with Kant's
contribution that exerted significant influence on it.
Although the Kantian system was intended to supersede both con-
tinental rationalism and British empiricism, history did not vindicate this
intention. Nevertheless, Kantianism can be considered as a synthesis (in
the Hegelian sense) of the other two traditions, that is, as an original system
subsuming both of them. In the Kantian system, knowledge is seen as
founded not just on pure reason, nor simply on sense-data, but on both.
Thus, the truth of propositions can only be assessed with reference to the
categories we use, which are methodical rules of an entirely a priori nature,
that is, independent of experience. The categories, therefore, are the
conditions of knowledge; although by themselves they give no knowledge
of objects, they serve to make empirical knowledge possible. Things
cannot be known except through the medium of categories which,
created by the mind, assume the function of synthesizing the sense-data.
The importance, however, of Kant in the alternative philosophy of
science is that, for the first time, a philosopher attains in his system of
knowledge one of the most important dialectical oppositions: between
empiricism and totality, between form and content, a theme that was later
expanded by Hegel and Marx. This is achieved, according to Goldmann, 26

through the development of the idea of totality. Thus, we may distinguish


three philosophical traditions with respect to their world views about the
fundamental category of human existence:

316
JUSTIFYING AN INCLUSIVE DEMOCRACY

• First, the individuahst/atomist tradition (Descartes, Leibniz, Locke,


Hume, Vienna Circle et al.), where the world view adopted sees the
individual as the principal category of human existence. Society, accord-
ing to this view, is a set of interactions among autonomous individ-
uals.
• Second, the holistic tradition (Schelling, Bergson, Heidegger et al,),
where the world view adopted sees the whole as the fundamental
category of human existence. The part here exists only as a necessary
means for the existence of the whole, and the autonomous individual
becomes the exception within the system (the leader, the hero, etc.).
• Finally, the tradition which uses as its principal category the concept of
totality in its two main forms of the universe and the human community.
The totality differs from the whole of the holistic world view because
the former is a contradictory whole. Thus, as Goldmann puts it:

The parts [of the totality] presuppose for their possibility their union in the
whole; the autonomy of the parts and the reality of the whole are not only
reconciled but constitute reciprocal conditions; in place therefore of the partial
and one-sided solutions of the individual or the collective, there appears the
only total solution, that of the person and the human c o m m u n i t y . 27

The concept of totality is a fundamental category of the dialectical


method because, according to dialectical philosophers, it not only allows
us to see a number of important contradictions in knowledge and social
reality, but it may also be used to resolve the contradictions between
theory and practice, the individual and the community. Thus, using the
concept of totality in its two main forms, we may see the following
dialectical contradictions:

• The contradiction between the parts and the whole in knowledge: the
parts can only be seen through the whole which envelops them, whereas
the whole can only be seen through factual knowledge of the parts.
• The contradiction between individuals and society: individuals can only
be seen through society, whereas society can only be seen through
knowledge of individuals. The motor of change is contradiction
between parts whose tension transforms the totality itself. Society,
therefore, cannot be seen as a set of interactions among autonomous
individuals. In fact, it is exactly because empiricists/positivists deny the
existence of any totality (theoretical or practical) and concentrate instead
on atomic propositions that they cannot unite the whole with the
individual. Thus, by assuming that knowledge is constructed by factual
connections, they rule out a theoretical totality. Also, by adopting the
fact/value dichotomy which implies that 'what is' — the positive element

317
TOWARDS AN INCLUSIVE DEMOCRACY

- has always to be distinguished from 'what should be' - the normative


element — they exclude a practical totality.
• The dialectical contradiction between the real given and the possible: a
contradiction arising out of the conception of reality as a goal, some-
thing to be achieved by action. As such, totality unites theory and
practice, the individual and the community. This is in contrast not only
to empiricism/positivism but, also, to rationalism, which is equally
dualistic and creates an artificial division between subject and object,
theory and practice.

The dialectical conception of objectivity


However, the contradiction between the real given and the possible does
not just refer to the conception of reality as a goal. In fact, if we use a
broader understanding of this particular contradiction, we may see clearly
the fundamental differences between the orthodox and the dialectical
conceptions of 'objectivity'. As dialectical philosophers argue, the contra-
diction between the real given and the possible adds two important
dimensions in the way we see reality: the historical and the ethical
dimension.
Thus, unlike positivism, which, lacking any historical dimension,
focuses on appearances, the dialectical approach, seeing the potentiality as
historical possibility, may examine the hidden causes of empirical phe-
nomena, the essence behind the appearances. Furthermore, the dialectical
approach can be used to derive an 'objective' ethics. Thus, whereas for
empiricists reality is 'what is', for dialecticians reality is 'what should be',
given the potentialities latent in development. So, 'what is' should always
be assessed in terms of what it could potentially become. This implies that
while reality for empiricists is factual and structural, for dialectical philoso-
phers it is processual. The very meaning of a 'fact' is therefore very
different in the dialectical method, since it consists not just of a set of
immutable boundaries but, instead, of a set of fluid boundaries and its
mode of becoming; in other words, it includes the past, the present and its
future.
Therefore, the concept of objectivity in dialectics takes on a very
different meaning from the traditional notion of objectivity in empiricism/
positivism. What is 'objectively true' is not what corresponds to facts/what
can be verified or, alternatively, what cannot be falsified/rejected, on the
basis of an appeal to sense-data, which, anyway, can only give information
about 'what is'. Instead, what is 'objectively true' in dialectics is, as
Bookchin puts it, 'the very process of becoming - including what a
phenomenon has been, what it is and what, given the logic of its
potentialities, it will be, if its potentialities are actualized'. In this sense,
28

318
JUSTIFYING AN INCLUSIVE DEMOCRACY

the dialectical 'real' is even more 'real' than the empiricist one; it expresses
the logical implications of the potential - it is the realization of the
potential, the rational. As a consequence of the fundamental differences
between the orthodox and the dialectical conceptions of objectivity, the
criteria of assessing the truth value of the theories derived from the use of
the respective methods are, also, very different. Thus, as Bookchin stresses:
'The kind of verification that validates or invalidates the soundness of
dialectical reasoning, in turn, must be developmental, not relatively static or
for that matter "fluctuating" kinds of phenomena.' 29

The dialectical method's historical and ethical dimensions introduce a


high degree of compatibility between it and radical analyses proposing an
alternative form of social organization. The dialectical approach, by
distinguishing between the real 'given' and what 'should be', offers itself as
an 'objective' justification of a liberatory project, both from the historical
and the ethical points of view. It is not surprising therefore that the
dialectical approach has been used by radical philosophers, from Marx to
Bookchin, to justify 'objectively' the need for an alternative society, a
socialist or an ecological society, respectively. By the same token, the
orthodox philosophy of science provides a concept of objectivity that can
be used in an 'objective' justification of the status quo. Thus, empiricism/
positivism, especially when used in the analysis of social phenomena, may
offer an 'objective' justification of 'what is', simply by draining social
development off its historical or moral content.
Needless to add that the incommensurability between the orthodox and
the dialectical conceptions of objectivity implies a corresponding in-
commensurability between the orthodox paradigms in social sciences and
the ones based on the dialectical method. As Murray Bookchin puts it:
'For analytical logic, the premises of dialectical logic are nonsense; for
dialectical logic, the premises of analytical logic ossify facticity into
hardened, immutable logical "atoms" '. 30

However, the dialectical approach is also unable to solve the problem of


'objectivity', as the following discussion will attempt to show. Mainly, this
is because for reality to be assimilated by dialectical thought, the condition
is that it should be dialectical in form and evolution and therefore rational.
This means that a dialectic has to postulate the rationality of the world and
of history at the very moment when this rationality is a theoretical, as well
as a practical, problem. As Castoriadis puts it:
31

The operative postulate that there is a total and 'rational' (and therefore
'meaningful') order in the world, along with the necessary implication that
there is an order of human affairs linked to the order of the world — what one
could call unitary ontology - has plagued political philosophy from Plato,

319
TOWARDS AN INCLUSIVE DEMOCRACY

through liberalism and Marxism. The postulate conceals the fundamental


fact that human history is creation — without which there would be no genuine
question of judging and choosing, either Objectively' or 'subjectively' 32

In fact, the dialectical approach suffers no less than the orthodox


approach from what Hindess and Hirst call the 'epistemological fallacy',
33

that is, the construction of an a priori core of concepts, assuming their own
conditions of validity. This is, of course, a position which easily brings to
mind the Kuhnian position that a paradigm contains its own criteria of
validity. But, let us examine first the Marxist version of dialectical ob-
jectivity, which shows clearly the problems of dialectical 'objectivity'.

Marxist Objectivity' and dialectics


The Marxist conception of objectivity is, of course, different from the one
used by orthodox philosophers of science as it is qualified by a 'social'
element, namely, that concepts and theories are conditioned by social
(class) interests, and a 'historical' element, in other words, that concepts
and theories are, also, conditioned by time. Still, these qualifications do not
aim to deny the supposed 'objective' and 'scientific' character of Marxist
analysis.
Thus, Marx, on the basis of changes in the 'economic sphere' (i.e. the
sphere that was mainly responsible for the transformation of society at a
specific place and time — Europe in the transition to capitalism), attempted
to provide a universal interpretation of all human history and render the
socialist transformation of society historically necessary. Marx had no
doubts about the 'scientific' character of his economic laws, which he
viewed as 'iron' laws yielding inevitable results, or about the 'objective'
character of his conception, which he paralleled to a natural history
process:
It is a question of these laws themselves, of these tendencies working with
iron necessity towards inevitable results . . . My standpoint, from which the
evolution of the economic formation of society is viewed as a process of natural
history . . , 34

As regards Lenin, he was even more explicit:


[Materialism provided an absolutely objective criterion [my emphasis]
by singling out the 'relations of production' as the structure of society . . .
creating the possibility of a strictly scientific approach to historical and social
problems. 35

The Marxist claim for 'objectivity', inevitably, led to methodological


debates among Marxists, which were very similar to the ones that have
taken place in the orthodox camp between positivists and rationalists/neo-

320
JUSTIFYING AN INCLUSIVE DEMOCRACY

Kantians. The debates concerned what has been called 'the problem of
knowledge', that is, the problem of the criteria by which a body of
knowledge can be assessed and, in particular, whether and how a theory's
correspondence to reality can be judged and demonstrated.
I would classify the variety of Marxist tendencies with respect to the
problem of knowledge as follows.
First, there is what I would call the 'philosophical tendency', a tendency
within which Practice is given priority over Theory. It is the tendency
which is inspired by what Castoriadis identifies as the revolutionary
36

element in Marx, that is, the element declaring the end of philosophy as a
closed system, which is expressed in the famous Eleventh Thesis of Marx
on Feuerbach: 'The philosophers have only interpreted the world in
various ways, the point however is to change it.' Within the context of
37

this tendency, no problem of knowledge arises. But then, as we shall see


below, the belief in a Marxist science based on objective truths also
becomes untenable, given the implicit or explicit relativism that character-
izes this tendency.
Second, there is what I would call the 'scientistic' tendency, where a
reversal of emphasis takes place, that is, the theoretical or scientific element
is given priority. This is the element that eventually dominated Marx's
work and Marxism thereafter, and it is what Castoriadis calls the traditional
element in Marxism. In fact, for an important school of modern Marxism,
that is, Althusser's structuralist Marxism, an epistemological break (a leap from
a pre-scientific to a scientific world view) should describe Marx's shift
from his early philosophical/humanist writings to his late (post-1845)
scientific ones. It is due to this 'scientific' element that Marxism ends up
38

as just another theory, another closed system to explain the essence of


society, and, in this sense, it faces exactly the same problem as other
scientific theories do about the guarantee of truth. The common feature of
all the currents belonging to this tendency is that they explicitly adopt the
desirability and feasibility of a neutral 'scientific' explanation of external
(social) reality.
Starting with the philosophical tendency, I will have to clarify, first, that
what I call the 'philosophical tendency' does not have much to do with
dialectical materialism, the view of Marxism-as-philosophy. Philosophy in
dialectical materialism is in fact a science, or, better, the science of history
and society, and as such belongs to the scientistic tendency we shall
consider next. McLennan, for example, is clear about it: 'The role of
philosophy, not as metaphysics but as generalizations from science and its
concepts, takes on a "scientific" aspect that stands or falls not with
ideology, but with science itself.' Such a view, however, of Marxism-as-
39

321
TOWARDS AN INCLUSIVE DEMOCRACY

philosophy also suffers (for the reasons mentioned above) from the
'epistemological fallacy' that Hindess and Hirst emphasize.
An alternative to the Marxism-as-philosophy view, more relevant to
the philosophical tendency, is the Marxism-as-method view. Lukacs, for
instance, argues that even if research disproved all Marxist theses in toto this
should not worry orthodox Marxists because 'orthodoxy refers exclusively
to method'. This view, however, can be criticized on several grounds.
40

First, as McLennan points out, the idea that Marxism is no more than a
41

methodological tool is not only strange, but also as philosophical as the


Marxism-as-philosophy view. Second, as Castoriadis emphasizes, 42

method and content are inseparable, the one creating the other, and
Marxist categories are themselves historical. A similar position was also
taken by Karl Korsh, who argued that Marxism, like all theories, has
historical conditions of existence, to which it alone is relevant. 43

The view commonly supported by the writers in the philosophical


tendency (Karl Korsh, George Lukacs (with some qualifications), Peter
Binns, Derek Sayer, Phillip Corridan and others) is that the starting point
in knowledge is neither pure self-awareness, as in rationalism, nor sense-
data, as in empiricism. The former creates an artificial duality between
subject and object, theory and reality, while the latter not only is dualistic
but also identifies essence with appearances. Instead, the starting point in
knowledge is considered to be human beings' active contact with society
and the natural world. Science, therefore, is the unity of Theory and
Practice, which not only interprets reality but also becomes part of the
force changing it, a part of praxis, that is, the conscious determinate
shaping of history. Thus, scientific laws are not predictive - not even in a
probabilistic sense, as Lukacs points out; instead, they only constitute a
44

framework within which theoretically informed and therefore effective


social practice is possible.
The fact that social practice is the source, the test and the aim of
knowledge is, of course, a commonplace among Marxists. The real issue,
therefore, is whether practice should be seen as the creator of truth and
knowledge or, alternatively, as a criterion of verifiability of knowledge. For
the philosophical tendency, practice creates knowledge within the context
of an empirically open-ended system. As Peter Binns puts it: 'Objective
truths are not uncovered so much as created; it is in the act of creating
them that they become revealed.' Therefore, the only criterion of
45

validity here is life, action, struggle. On the other hand, for the scientistic
46

tendency, knowledge constitutes in effect a closed theoretical system, and


practice functions as a criterion of its verifiability. It is therefore obvious
that no problem of criteria and of scientificity could arise within the
philosophical tendency, as such a problem presupposes a distinction made

322
JUSTIFYING AN INCLUSIVE DEMOCRACY

between subject and object, between theory and reality, a distinction


explicitly denied by this tendency. By the same token, one can explain the
ultimate cause of the problem of knowledge. The problem arises because
in the orthodox philosophy of science the criterion of validity is external,
outside the social being of those holding the ideas: it is located either
somewhere in an autonomous and a-social realm of reason (rationalism) or
in experience (positivism).
The price, however, to be paid in order to overcome the problem of
knowledge in this way is heavy: Marxism cannot claim any longer that it
has a scientific status based on objective truths, as Marxist critics of the
above thesis were quick to point out. Obviously, if we accept that theory
is based on practice, by which it is meant the class practice of the
proletariat, we are going to end up not with a science based on objective
truths, but with a class science. The Marxist argument that the proletariat
expresses the general interest of society in abolishing class society does not
make the scientific claim of Marxism any more valid because the super-
iority of Marxist theory still depends on its unique ability, as potential
working-class consciousness, to abolish the class system. This is why
Marxist critics of the scientistic tendency, like Collier, argue that the
47

above view of Marxism transforms it into theology and that practice


should be seen not as creating truth but as merely ascertaining its occurrence,
a position that Kolakowski, rightly, characterizes as 'Marxism of a
48

positivistic orientation'. In this light, one may observe that it is no accident


that Marx himself, as Castoriadis has shown, had to abstract from the class
49

struggle in deriving his 'laws' of motion of capitalism, because only in that


way could he develop a scientific theory of socialism. The class struggle is
absent in deriving his scientific laws and reappears again only at a different
level of analysis, namely, in bringing down a system whose essential nature
has been demonstrated by abstracting from it.
Therefore, the 'solution' to the problem of knowledge that was pro-
vided by the philosophical tendency is vacuous. As orthodox social science
could, also, be seen as a class science to serve the dominant class's interests,
we end up with two class sciences, in other words, two incommensurable
paradigms, and no possibility of developing an objective science of society.
Furthermore, the view, sometimes expressed by Marxist writers, that the
50

class character of Marxian economics does not call into question its
scientific validity, on the grounds that this validity depends entirely on its
ability to explain reality, obviously begs the question, as there is no
'objective' way to decide which paradigm better explains reality.
However, the basic thesis of the philosophical tendency, that dialectical
materialism is not only distinct from, but also a safeguard against, orthodox
epistemology and, further, that method can be separated from content, is

323
TOWARDS AN INCLUSIVE DEMOCRACY

not universally accepted among Marxists, and particularly not by those


51

emphasizing the scientific nature of Marxism (scientistic tendency). The


common elements shared by Marxists in this tendency are, first, that reality
is independent of theory (though the reverse is not true); second, that
theory is independent of its subject, and, finally, that the truth of a theory
is found in its ability to 'appropriate' or reproduce reality in thought. But,
as there are several ways to establish that a theory corresponds to, or
adequately reflects, reality, the main division among orthodox philoso-
phers of science (rationalists versus empiricists/positivists) is, inevitably,
reproduced within the Marxist scientistic tendency.
Thus, as regards, first, the empiricist tendency within Marxism, it
originated in the late writings of Engels and was further developed by
52

Plechanov, Bucharin and Lenin. In modern times, this tendency has


53

dominated Anglo-American Marxism, reflecting, one could suspect, the


traditional dominance of empiricism/positivism in this part of the world.
The problem of knowledge does exist in this tendency, and the solution to
it is given in terms of empiricist criteria that could establish the adequacy of
the theory with respect to its correspondence to reality.
So, although the exact testing procedures are not specified, it is clear that
a correspondence theory of truth is involved here. Still, it should be
stressed that, notwithstanding the fact that experience is the ultimate
criterion of truth in both orthodox and Marxist positivism, the methodo-
logical individualism of the former is explicitly r e j e c t e d by the latter.
Sense-data therefore are not considered to be the starting point of
knowledge; nor does reality have to be reduced to atomic components to
be understood scientifically. Furthermore, the aim remains the discovery
of the essence behind appearances. However, since the ultimate aim of
empiricist Marxism is the raising of the socialist project from a Utopian
ideal to a science of the economy/society, all those elements of Marxist
dialectics - principally the class struggle - that could not be built into the
scientific laws of the economy have to be abstracted from and transferred
to a different level of abstraction.
In my view, empiricist Marxism not only is not in a position to solve the
problems orthodox empiricists/positivists face (non-existence of 'brute'
facts, lack of non-vacuous standards to assess rival theories, etc.), but it also
adds some extra problems due to its vagueness. For instance, how the
adequacy of a theory with respect to experience should be assessed:
through a verification/falsification procedure, through success in social
practice or through some other criterion? Let us examine the problem
with a concrete example. As is well known, the Marxist theory of value
does not meet the positivist/falsificationist requirements of a scientific
hypothesis. That is why some Marxists attempted to solve the problem by

324
JUSTIFYING AN INCLUSIVE DEMOCRACY

suggesting (on the basis of Marx's spare writings on methodology) that


value, as well as 'all specifically Marxian laws and developmental con-
structs', should be treated as Weberian ideal-types. However, as Weber
54

points out, the function of an ideal-type is always the comparison with


55

empirical reality; therefore, the problem of the guarantee of the ideal-


type's truth still remains unresolved. 56

Furthermore, the question remains as to how the distinction between


the praxis of the social subject and his awareness of that praxis can be
removed; in other words, how empiricism could be reconciled with
Marxist dialectics. Finally, the fundamental question still remains: how
37

can we be sure that we have discovered the essence behind appearances,


especially when the essence is contradicted by phenomena?
The second major current in the scientistic tendency is the rationalist
one. The starting point here is the necessity for the conceptualization of
reality, prior to the possibility of science. This implies a denial of the
empiricist position that beliefs/propositions about reality could be derived
from a world experienced, but not yet conceptualized. The French
Marxist structuralist school might be classified in this current of Marxism,
although Marxist structuralists themselves might deny their classification as
rationalists in the above sense. However, their affinities to rationalism are
much more significant than those to any other tendency/current in
Marxism. 58

For structuralist-Marxists, the problem of knowledge is an ideological


problem, as ideological as all traditional epistemology. The real issue for
59

them is not one of criteria of scientificity, but of mechanisms producing a


knowledge effect. The criteria of knowledge are defined within the
science itself, by its scientificity, its axiomatics. As Althusser puts it:
Theoretical Practice is indeed its own criterion and contains in itself definite
protocols with which to validate the quality of its products, i.e., the criteria of
the scientificity of the products of scientific practice.
60

In fact, Marxism, according to structural-Marxists, is not only a science


but a superior science, the science of all sciences, given its ability to
synthesize the various special sciences. Marxism therefore becomes the
general theory of Theoretical Practice and 'the key to and judge of what
counts as genuine knowledge'. 61

However, Althusser's operation to do away with the philosophy of


guarantees is also a failure. As several (Marxist) critics have pointed out,
Althusserians base their theory of Theoretical Practice on a coherence
theory of truth, where the criterion of truth is simply comprehensiveness
and lack of contradictions with respect to the thought structure of
Marxism. Therefore, Althusserian Marxism can only claim superiority
62

325
TOWARDS AN INCLUSIVE DEMOCRACY

over other sciences (which might be equally comprehensive and non-


contradictory) if one accepts a priori the world view embodied in the
structuralist paradigm. As Binns points out:
Not only are the parameters in terms of which the world is to be examined
structure-specific, but so too are the very conceptualizations of the world they
are used to explain. The very incommensurability of these world-syntheses
effectively prevents any demonstration of the superiority of any of them. To
accord any of these the honorific description of being scientific in these
circumstances, as does structuralist Marxism, seems quite gratuitously and
pompously misleading. 63

Althusserian Marxism is, therefore, a clear example of objectivist ration-


alism, where, as Castoriadis puts it, 'Past history is rational . . . future
history is rational . . . the connection between the past and the present is
rational.' The implication of such a view of history is that, as the same
64

author points out: 'Marxism does not transcend the philosophy of history,
it is just another philosophy of history; the rationality which Marxism
supposedly induces from the facts is, in fact, imposed on them', so that, in
65

the end, 'Marxism is not any more, in its essence, but a scientific
objectivism, supplemented by a rationalist philosophy.' But then, as was
66

effectively shown, the creative and imaginary element in history plays a


67

very limited role, namely one that is consistent with the Althusserian view,
according to which the true subjects and real protagonists of history are not
biological men but the relations of production. Men, in this context
(which nobody who wishes to call himself a believer in Marxist dialectical
and historical materialism can discard), are only the 'supports' (Trager) or
bearers of the functions assigned to them by the relations of produc-
tion. 68

Finally, the latest development in Marxist epistemology is 'realist


Marxism', which can be seen as an attempt at a dialectical synthesis of
modern empiricism/positivism on the one hand and rationalism/
Kantianism on the other. In fact, some recent Marxist work considers the
realist epistemology as a way to overcome the present crisis of Marxist
theory, in the sense that it avoids the pitfalls of both the dialectical
approach (essentialism, teleology) and of empiricism/relativism (a-
theoretical character). 69

The object of scientific knowledge, according to realist philosophers of


science, is neither atomistic events and phenomena (as in empiricism/
positivism), nor models, that is, human constructs imposed on phenomena
(as in rationalism/Kantianism). Instead, the object of scientific knowledge
is structures and mechanisms that generate phenomena, which operate
independently of our knowledge and experience. Science, as defined by a

326
JUSTIFYING AN INCLUSIVE DEMOCRACY

realist philospher, is 'the systematic attempt to express in thought the


structures and ways of acting on things that exist and act independently of
thought'. 70

The realist definition of science is based on three fundamental assump-


tions: first, that the world is structured (so that science is possible); second,
that the world is an open system (i.e. a system where no constant
conjunction of events prevails) consisting of enduring and non-empirically
active natural mechanisms; and third, that the ontological order is com-
pletely independent from the epistemological order. The last assumption
implies that philosophical ontology (Is the world structured/
differentiated?) should not be confused with epistemological ontology
(Which are the particular structures contained in the world?). The only
link between the two orders can be provided by experimental activity,
which can give us access to the enduring and active mechanisms that
constitute the real world, through the creation of close conditions that
make the confirmation/falsification of a theory possible.
Therefore, an open system cannot be adequately grasped in terms of the
constant conjunction of observed phenomena (as empiricists attempt to
do) because perception gives access only to things, not to structures that exist
independently of us. Thus, the empiricist causal laws are only expressing
tendencies of things, not conjunctions of events, and are tied up to closed
systems. The inadequacy of the empiricist/positivist criteria of
confirmation/falsification is due to the fact that they are based on the
assumption that a closed system is the rule, rather than the artificially
generated exception. Although, therefore, realists do not reject the general
relativity of knowledge that Kuhn, Feyerabend and others emphasize, and
according to which descriptions of the world are always theoretically
determined and not just neutral reflections of it, still, they argue that,
provided that we can create closed conditions, we can get access to the
structures of the world. This has the important implication that a criterion
of choosing among incommensurable theories is possible. Thus, as Bhaskar
puts it:
A theory T is preferable to theory T , even if in the terminology of Kuhn and
a b

Feyerabend it is incommensurable with it, if theory T can explain under its


a

descriptions almost all the phenomena p . . . p that T can explain under its
1 n b

descriptions Bp . . . Bp plus some significant phenomena that T cannot


t m b

explain.71

However, the applicability of this criterion crucially depends on the


possibility of experimental activity, a fact that turns any idea of methodo-
logical monism into a fantasy; the realist safety valve to preclude relativism
cannot, by definition, work with social sciences. This is so because,

327
TOWARDS AN INCLUSIVE DEMOCRACY

although society may be an open system - as realists assume — it is


impossible to create artificially closed conditions in order to confirm/
falsify our theories about it.
Realist philosophers of science are, of course, well aware of the problem
and make a determined effort to 'solve' it, or, at least, bypass it. McLennan,
for instance, argues that social theory is necessarily historical, given the
constitutive role that agency and thought play with respect to its object of
study. However, the procedures he suggests, so that the lack of experi-
mental activity in social sciences does not play a decisive role in differ-
entiating them from natural sciences, are obviously inadequate. Thus, the
criteria that he mentions, in his attempt to support the 'objectivity' of
social inquiry (theoretical abstraction, systematic and coherent theoretical
explanations at a number of levels, explanation of concrete phenomena by
causal and other sets of propositions), do not provide any effective
72

solution to the problem. For instance, two paradigmatic theories, the neo-
classical and the Marxist theories of value, can perfectly satisfy all the above
criteria, without - in the absence of experimental activity - providing any
solution to the problem of choosing between them.
The inescapable conclusion is that the problem of choosing among
incommensurable theories in the social sciences and — by implication — the
problem of scientifying or objectivizing the liberatory project, have not
been solved by realist philosophers either. 73

Dialectical naturalism: an objective ethics?


However, if the project for a future society cannot be justified on the basis
of a teleological conception, either a teleological view of social evolution
(as Marxists attempted to do) or a teleological view of natural evolution (as
some deep ecologists suggest today), the question remains whether such
74

a project may be justified on the basis of a non-teleological view of natural


and social evolution, which, however, is objectively rational. This is the
case of Murray Bookchin's dialectical naturalism, which, although it
75

assumes a directionality towards a democratic ecological society - a society


that may never be actualized because of 'fortuitous events' — is an explicitly
non-teleological conception. Thus, as Bookchin stresses:
Dialectical naturalism does not terminate in a Hegelian Absolute at the end
of a cosmic developmental path, but rather advances the vision of an ever-
increasing wholeness, fullness, and richness of differentiation and sub-
jectivity.
76

The attempt to establish a directionality towards an ecological society


depends on two crucial hypotheses:
(a) That there is a directionality in natural change, which yields a clearly

328
JUSTIFYING AN INCLUSIVE DEMOCRACY

discernible evolutionary development towards more complex forms


of life, greater subjectivity and self-awareness, growing mutuality, i.e.
a development towards an 'ever-greater differentiation or wholeness
insofar as potentiality is realized in its full actuality'. Thus, Bookchin,
77

differentiating his process of 'participatory evolution' from the preva-


lent neo-Darwinian synthesis, sees 'a natural tendency toward greater
complexity and subjectivity in first (biological) nature, arising from
the very interactivity of matter, indeed a nisus toward self-
consciousness. 78

(b) That there is a graded evolutionary continuum between our first


nature and our second (social and cultural nature, so that 'every social
evolution is virtually an extension of natural evolution into a distinctly
human realm'. Although, of course, it is explicitly acknowledged
79

that social evolution is profoundly different from organic evolution,


still, social change is characterized by a process of progress, defined as
'the self-directive activity of History and Civilization towards increas-
ing rationality, freedom'. Thus, 'second nature', namely, the evolu-
80

tion of society, 'develops both in continuity with first nature and as its
antithesis, until the two are sublated into "free nature", or "nature"
rendered self-conscious, in a rational and ecological society'. 81

Let us therefore assess in more detail these two hypotheses. As regards,


first, the hypothesis about the existence of a rational process of natural
evolution, Castoriadis points out that although the fact of evolution itself
is incontestable, biologists have never developed a genuine theory of
evolution, which means that the neo-Darwinian synthesis is in fact a
theory of species differentiation, not of the evolution of species, and that
therefore nothing in this theoretical scheme implies that differentiation
occurs in the direction of increasing complexity. However, one may
82

counter-argue here that the results of recent biological research support


the hypothesis of increasing complexity. Thus, modern developments in
biophysics, in terms of the self-organization theory, introduce into biology
a type of'law of increasing complexity' which is consistent with dialectical
naturalism. 83

But, although the hypothesis about a rational process of natural evolu-


tion is not groundless, the hypothesis about the existence of a rational
process of social evolution is, to my mind, both undesirable and untenable.
It is undesirable, not only because it creates unintentional links with
heteronomy, but also because it may easily lead to inadvertent affinities
with intrinsically anti-democratic eco-philosophies. And it is untenable
because history does not justify the existence of progress towards a free
society, in the sense of a form of social organization which secures the

329
TOWARDS AN INCLUSIVE DEMOCRACY

highest degree of individual and social autonomy at the political, the


economic and the social levels, what we defined in Chapter 5 as an
inclusive democracy.
Thus, as regards, first, the undesirablity of the social directionality
hypothesis, one may point out that the postulate according to which there
is a 'rational' order in the world and a corresponding order of human affairs
linked to the order of the world not only is essentially linked to heteron-
omy (because it conceals the fundamental fact that history is creation), but
also conceals or eliminates the question of responsibility. Therefore, 84

unless we underplay the significance of the imaginary element in human


history, as Marxists do, we have to conclude that it is impossible to
establish any sort of social evolution towards a particular form of society:
History does not happen to society: history is the self-deployment of society.
By this affirmation, we contradict the entire spectrum of existing tenets:
history as the product of the will of God; history as the result of the action of
('natural' or 'historical') laws; history as a 'subjectless process'; history as a
purely random process . . . we posit history in itself as 'creation and
destruction'.85

Furthermore, the attempt to establish a directionality in society might


easily create undesirable affinities with deep ecology. Although such
affinities are utterly repugnant to social ecologists, still, they are implicit in
the fact that both deep ecologists and social ecologists adopt a process of
evolutionary unfolding and self-realization and ground their ethics in
scientific observations about the natural world, in natural 'tendencies' or
directionalities. This fact could go a long way to explain the various
hybridized approaches developing at the moment among John Clark, an
ex-social ecologist whose anti-democratic views we considered in Chap-
ter 5, Peter Marshall and others. The inevitable outcome of such affinities
86

is that the debate on what form of society meets the demands for
autonomy and ecological balance becomes not a matter of conscious
choice, but a matter of interpretation of what natural change really means
with respect to society. However, as it is not possible to establish any
'authentic' interpretation about the meaning of natural change, we may
easily end up not just with liberatory interpretations, like the ones offered
by social ecology, but also with interpretations which are consistent with
any form of heteronomy and repression, from eco-fascism to mysticism
and irrationalism.
Second, as regards the untenability of the social directionality hypothesis
it should be made clear that society is not 'alien' to a self-organizing Nature
and that Bookchin's contribution in demolishing the nature-society
dualism is of paramount importance. But, although one may have no

330
JUSTIFYING AN INCLUSIVE DEMOCRACY

reservations in adopting the hypothesis that self-consciousness and self-


reflection have their own history in the natural world and are not sui
generis, 'the product of a rupture with the whole of development so
unprecedented and unique that it contradicts the gradedness of all phe-
nomena', still, it would be a big jump to adopt a similar hypothesis about
87

progress towards a free society. In other words, even if one accepts the
hypothesis that self-consciousness and self-reflection, in very broad terms,
are part of a dialectical unfolding in Nature and do not just represent a
rupture with the past, this does not imply that there is a similar dialectical
unfolding towards a free society, i.e., an inclusive democracy. Such a view
is incompatible with historical evidence which clearly shows that the
historical attempts at a free society have always been the result of a rupture
with the instituted heteronomy which has been dominant in the past,
rather than a sort of processual 'product'.
The fact that societies, almost always and everywhere, have lived in a
state of instituted heteronomy (namely a state of non-questioning of existing
laws, traditions and beliefs that guarantee the concentration of political and
economic power in the hands of elites), with no trace of an 'evolution'
towards democratic forms of organization securing individual and social
autonomy, clearly vitiates any hypothesis of a directionality towards a free
society. In fact, if there is any continuity in history, it is a continuity in
heteronomy interrupted by usually sudden and temporary leaps into
'autonomous' forms of organization. Thus, an autonomous form of
political organization (direct democracy) has always been the rare excep-
tion and even rarer have been the cases of autonomous forms of
economic and social organization (economic democracy and 'democracy
in the social realm'). It is only, therefore, with respect to social change in
a broad sense, which includes the accumulation of scientific and techno-
logical knowledge, as well as improvements with respect to gender
relations, human rights, etc., that we may perhaps speak of some sort of
progress. However, these changes in no way justify the hypothesis of a
directionality towards a free society, an inclusive democracy.
Thus, as regards scientific and technological change, few would argue
today, particularly after the experience of this century, that there is some
sort of correlation between progress in these fields and the degree of
autonomy achieved in society at the political and economic levels.
Furthermore, several writers have noted the increasing vulnerability of the
human species because of the worldwide reliance on the same technology
and the fact that increasing technological complexity is accompanied by an
increasing lack of flexibility and adaptive capacity. However, if one
88

accepts the non-neutrality of technology thesis, one may counter-argue


89

here that the homogenization of technology is not an 'independent

331
TOWARDS AN INCLUSIVE DEMOCRACY

variable' but just the inevitable outcome of the marketization of the


economy.
As regards the alleged improvements in gender, race, ethnic relations,
human rights in general, they hardly justify the hypothesis of directionality
towards a free society, in the sense of an inclusive democracy. The
improvements in social relations and structures have not been matched by
a corresponding progress in political and economic relations and structures
towards political and economic democracy. The widening and deepening
of women's rights, minorities' rights, etc., may have improved the social
position of the members of the respective communities. But, from the
democratic viewpoint, this process simply has led to the expansion of the
ruling political and economic elites to include representatives of these
communities. Furthermore, these improvements do not imply any signifi-
cant changes with respect to democracy in the workplace, the education
place, etc. Even as regards the human rights record one may raise serious
doubts about the progress achieved. Torture, for instance, after tapering
off with the Enlightenment in Europe in the seventeenth century to the
extent that it had almost disappeared, came back with a vengeance this
century. According to a very recent report, torture practised by govern-
ments around the world increased dramatically this century, especially in
Europe, to the extent that the twentieth century may become known as
'the torturer's century'.90

At the cultural level, as Polanyi has persuasively shown, the establish-


91

ment of the market economy implied sweeping aside traditional cultures


and values. This process, as we have seen in Chapter 3, was accelerated in
the twentieth century with the spreading of the market economy and the
implied growth economy all over the world and the inevitable elimination
of all cultures not based on the system of the market economy. As a result,
today, there is an intensive process of cultural homogenization at work,
which not only rules out any directionality towards more complexity, but
in effect is making culture simpler, with cities becoming more and more
alike, people all over the world listening to the same music, watching the
same soap operas on TV, buying the same brands of consumer goods,
etc.
Finally, as regards ethical progress, i.e. the evolution towards moral
'improvement' (in terms of mutuality, solidarity, etc.), it is indicative that
even social democrats like Habermas and Bobbio, who have an obvious
vested political interest in the idea of progress and social evolution, do
admit that it is not possible to assert the existence of ethical progress,
despite the acknowledged rapid technological progress of the last 100 years
or so. Thus, Habermas, countering the pessimism of the Frankfurt School
about progress, argues that the error in the Marxist and other optimistic

332
JUSTIFYING AN INCLUSIVE DEMOCRACY

theories of social evolution lies in the presumption that progress on the


system's level (which attends to the material reproduction of society)
would automatically entail an improvement on the level of moral-practical
conscience. So, one may argue that the unmistakable trend, at least in the
92

past two to three centuries, has been for growing selfishness and growing
competition, rather than for enhanced mutuality and solidarity. Similarly,
it is at least doubtful whether there has been an ethical progress in terms of
environmental values. 93

But let us look in more detail at the historical appearance of the


autonomy tradition and assess the case of evolution towards a free society.
Following Castoriadis's periodization, the autonomy project emerged in
94

classical Athens, where, for the first time in human history, the institution
of society was questioned both at the institutional and the imaginary level.
This was in contrast to the state of heteronomy, which characterized all
societies up to then and almost all societies since then, where 'a society,
despite the fact that it is always a self-creation which creates its own
institutions, still, in order to protect these institutions it imagines and
legislates that they are not a human creation but an extra-social creation: a
creation of God, or of the laws of Nature, History or Reason, which
therefore we can not change'. The autonomy project, which reached its
95

peak in classical Athens, was eclipsed for almost 15 centuries, a period


during which heteronomy was dominant.
The autonomy project reappeared again in the twelfth century AD, in
the medieval free cities of Europe, but soon came into conflict with the
new statist forms of heteronomy which, in the end, destroyed the attempts
at local self-government and federalism. In the period 1750-1950, a
96

fierce political, social and ideological conflict developed between the two
traditions. The heteronomy tradition is expressed by the spreading of the
market economy and of new social forms of hierarchical organization.
These forms embodied a new 'social imaginary signification' (adopted by
the socialist movement): the boundless spreading of 'rational domination',
which identifies progress with the development of productive forces and
the idea of dominating Nature. During the same period, the autonomy
project, under the influence of the Enlightenment's ideas, was radicalized
at the intellectual, social and political levels (e.g. Parisian Sections of the
early 1790s, collectives in the Spanish Civil War, etc.)
Finally, in the present era (1950 onwards), both traditions have entered
a period of serious crisis. Thus, although the spreading of the market
economy's rational domination is accelerating, the system itself is in a deep
crisis, a crisis not in the Marxist sense of the capitalist relations of
production hindering the further development of forces of production,
but in the sense, as we have seen in previous chapters, first, of the market

333
TOWARDS AN INCLUSIVE DEMOCRACY

economy's dismal failure to create a successful growth economy in the


South (where the vast majority of the earth's population lives); and second,
of the growing ecological destruction that not only degrades the quality of
life but threatens life itself on the planet. Paradoxically, at the same time,
the autonomy tradition, after its brief explosion in the late 1960s, is also in
a state of 'total eclipse', a fact illustrated by the lack of social, political and
ideological conflicts.
The issue that arises therefore is whether changes in the historical forms
of social organization reveal some kind of directionality towards a free
society, which would represent the graded actualization of unfolding
human potentialities (in the dialectical sense of the word) for freedom (as
dialectical naturalism maintains), or whether, instead, they do not reveal
any form of directionality, since the form society takes each time just
represents social creations conditioned (but not determined) by time and
space constraints, as well as by institutional and cultural factors. The former
view sees history as a process of progress, the unfolding of reason, and
assumes that there is an evolution going on towards autonomous or
democratic forms of political, economic and social organization, a view
which, to my mind, is not supported by history. The latter view sees the
autonomous society as a rupture, a break in the historical continuity that
the heteronomous society has historically established.
Of course, 'autonomy/heteronomy' is not an ironclad distinction.
Autonomous and heteronomous forms of social organization historically
interact with each other, and elements of both may coexist within the
boundaries of the same society. For instance, as we have seen in Chapter 5,
the Athenian democracy was a form of society that embodied strong
elements of autonomy (direct democracy — as regards free citizens) and
heteronomy (economic inequality, gender inequality, slavery — as regards
the rest). Furthermore, in today's sophisticated heteronomous societies,
there are several elements of autonomy, remnants, usually, of past conflicts
between the autonomy and the heteronomy tradition. Taking, therefore,
for granted the interaction between autonomy and heteronomy, in other
words, explicitly assuming that the two traditions change themselves and,
to some extent, each other over time, the real issues are, first, whether the
two traditions are qualitatively different and, second, assuming they are,
whether any evolutionary pattern may be established towards the auto-
nomous form of social organization.
As regards the first question, I think few would disagree with the thesis
that autonomy and heteronomy are not just quantitatively but qualitatively
different. Historically, the autonomy and heteronomy traditions are ex-
pressed in various forms of social organization: the former in the form of
the Athenian democracy, the Swiss cantons, the French revolutionary

334
JUSTIFYING AN INCLUSIVE DEMOCRACY

sections, to mention just a few examples; and the latter, in the form of
absolute monarchies, constitutional monarchies, parliamentary 'democ-
racies' and state socialism. The common characteristic of autonomous
forms of social organization is that they are all based on the fundamental
principle of the equality in the distribution of power, whereas the opposite
is true for all heteronomous forms. It is therefore obvious that the
differences between the various types of heteronomous (as well as types of
autonomous) forms of social organization are quantitative, whereas the
differences between the autonomous and heteronomous forms themselves
are qualitative. Autonomy and heteronomy are two fundamentally differ-
ent traditions expressing completely different 'paradigms' about social
living; they are incommensurable. The question therefore here is whether,
as the famous Hegelian 'law' maintains, quantitative differences beyond a
certain point are transformed into qualitative changes, or whether, instead,
there is no possibility of establishing any sort of evolutionary process
between the autonomy and the heteronomy traditions.
This brings us to the second question I raised above. According to
dialectical naturalism, 'between [autonomy and heteronomy] is a dialectic
that has to be unravelled in all its complexity, involving interrelationships
as well as antagonisms', whereas, according to the view presented here,
97

despite the development within each tradition and the possible interaction,
still, no development between them may be established. For instance, one
may support the case that although constitutional monarchy did express a
more sophisticated form of heteronomy than absolute monarchy and, by
the same token, parliamentary 'democracy' does represent the most
sophisticated form of oligarchy in history, still, the differences between the
political regimes involved refer to the size and the composition of the
ruling elites, not to the fundamental distinction itself between ruling elites
and the rest of the population - a distinction that excludes the vast majority
of the population from any effective political decision-taking. Similarly,
the Parisian Sections of the early 1790s, where women had an equal share
98

in the distribution of political power, did express a more complete form of


democracy than the Athenian assemblies. Finally, the Spanish collectives
in the Civil War, which contained a significant element of economic
99

democracy, did express a more complete form of autonomy than both the
Athenian and the Parisian assemblies.
Also, although it is recognized that the break with the heteronomy
tradition takes place in a specific time and place and that therefore history,
tradition, and culture certainly condition the form that society takes,
institutional and historical factors never determine when and where this
break will take place, or even the specific form the autonomous organiza-
tion of society will take. An autonomous form of social organization has

335
TOWARDS AN INCLUSIVE DEMOCRACY

always been a creation expressing a break with past development. The rare
historical cases of relatively free forms of social organization came about as
a result of the fact that at certain historical moments, for reasons that only
partly refer to the concrete historical circumstances, social imaginary
significations expressing the autonomy project had become hegemonic
and led to a rupture of the dominant social paradigm of heteronomy. 100

That such ruptures do not fit in any unfolding dialectical pattern of history,
and cannot even be considered as 'reactions' to heteronomous forms of
organization, becomes obvious by the fact that repeatedly in history
similar, if not identical, institutional and historical circumstances led to
very different forms of social organization. As a rule, they led to heterono-
mous forms of social organization and only very exceptionally to attempts
at autonomy.
The classical Athenian democracy is a characteristic example. There is
no doubt that the movement from tribal blood ties to civic ties represents
a form of development. The question is whether this development is a
development within the heteronomous tradition or, alternatively, one
between the two traditions. I would argue that although elements of
autonomous organization may be found in tribal societies (e.g. tribal
assemblies), still, the movement from tribes to cities represents a develop-
ment predominantly within the heteronomous form of social organization
and only in one exceptional case (Athenian democracy) towards a new
form of autonomous organization. This fact, in turn, illustrates the signifi-
cance of the imaginary or creative element in history, rather than of any
kind of an evolutionary pattern in political organization. As Castoriadis
puts it:
Democracy and philosophy are not the outcome of natural or spontaneous
tendencies of society and history. They are themselves creations and they
entail a radical break with the previously instituted state of affairs. Both are
aspects of the project of autonomy . . . the Greeks [discovered] in the sixth
and fifth centuries that institutions and representations belong to nomos and
not to physis, that they are human creations and not 'God-given' or 'nature-
given'.101

A view of history based on an evolutionary pattern could not explain


why a similar movement from tribes to cities in many parts of the world,
even in classical Greece itself, has led on the one hand to the classical
Athenian democracy and on the other to a variety of oligarchic, if not
despotic, forms of political organization. Of course, few would deny that
specific 'objective' factors (geography, climate, etc.) may have played a
significant, but never a decisive, role on each historical occasion. What is
disputable is whether there has been a long-term pattern of social evolu-

336
JUSTIFYING AN INCLUSIVE DEMOCRACY

tion that led to classical Athenian democracy - an experiment that, in its


full democratic form, was not repeated elsewhere at the time and which
re-emerged hundreds of years later.
Parliamentary 'democracy' is another example. As we have seen in
Chapter 5, parliamentary democracy is not a form of political democracy;
as it has developed in the West, it may better be described as a form of
liberal oligarchy. Furthermore, parliamentary democracy can in no way be
seen as a stage in the development of democracy. This is obvious not only
from the fact that direct democracy historically preceded parliamentary
'democracy' but also because, as the experience of the past two centuries
or so has shown, parliamentary democracy, if it evolves into something,
evolves into a further concentration of political power in the hands of
professional politicians' elites, at national or supra-national levels. Social
development, in terms of political organization, is not 'cumulative', i.e.
one leading from various forms of 'democracy' which reflect quantitative
differences (constitutional monarchy, parliamentary democracy, etc.),
towards direct democracy - which is clearly a qualitative change.
By the same token, the market economy is neither a relative (even a
poor one) to economic democracy, nor does it constitute a kind of stage in
the development of economic democracy. Instead, as I tried to show in
Chapter 1, today's market economy represents a definite step backwards in
comparison to the socially controlled economies of the medieval free
cities. Furthermore, if the market economy evolves into something it
evolves towards further concentration of economic power, and there is no
prospect whatsoever that a market economy will ever lead, through
cumulative quantitative changes, to the qualitative change of economic
democracy.
Finally, the various attempts at 'democracy in the social realm', parti-
cularly workplace democracy (workers' councils, Soviets), and for democ-
racy in educational institutions have always been associated with historical
'moments' of insurrection and as soon as 'order' has been restored, either
by the institutionalization of a 'revolutionary' new regime of heteronomy
(e.g., the Soviet Union) or the continuation of the old one, the democratic
forms have been replaced by forms of pseudo-democracy at the work-
place, the university, etc.
So, it is not possible to derive any sort of evolutionary process towards
a free society, what we called an inclusive democracy. The historical
attempts to establish autonomous forms of political, social and economic
democracy, although, of course, they did not appear ab novo, cannot be
fitted into any grand evolutionary process. This is clearly indicated by the
fact that such attempts took place in specific times and places and as a break
with past development, rather than in several societies at the same stage of

337
TOWARDS AN INCLUSIVE DEMOCRACY

development and as a continuation of it. Therefore, although the ideals of


freedom may have expanded over time, the last 25 years or so notwith-
standing, this expansion has not been matched by a corresponding evolu-
tion towards an autonomous society, in the sense of greater participation of
citizens in decision-taking. In fact, the undermining of communities,
which was intensified by the emergence of the market economy 200 years
ago and has been accelerated by the development of the present inter-
nationalized market economy, as well as the growing privacy and self-
interest of individuals encouraged by the consumer society, are clear
indications of a trend towards more heteronomous forms of society rather
than the other way round. Therefore, if we accept the view that I tried to
develop in Chapter 1, i.e. that the present internationalized market
economy marks a new, higher phase in the marketization process, then all
the signs are that we have entered a new period where the '40 per cent'
societies of the North will be based on sophisticated forms of heteronomy,
whereas the miserable societies of the South will rely on various forms of
brutal authoritarianism.
So, one may assume that if inclusive democracy ever replaces the
present heteronomous forms of political and economic organization, this
will represent not the actualization of unfolding potentialities for freedom
but simply the conscious choice among two social possibilities, which
schematically may be described as the possibility for autonomy versus the
possibility for heteronomy. In other words, to my mind, the dialectical
idea of unfolding objective potentialities, i.e. of real latent possibilities
which may (or may not) be actualized, is not applicable at all in the case of
social change. To talk about any particular being that, in developing itself,
actualizes what at first was only a latent possibility and in this way attains its
own truth, we have to assume that there is a specific possibility in the first
place and not a choice of different possibilities. Therefore, whereas it is
true that an acorn has the potentiality to become an oak tree and a human
embryo to become a fully mature and creative adult, we cannot extend the
analogy to human society and assume that the potentiality of society to
become free 'is equivalent' to these natural potentialities. The obvious
102

difference between the potentialities of acorns and human embryos to


become oak trees and adults, respectively, and those of society to become
free is that the former represent single possibilities whereas the latter is just
one possibility out of two broad possibilities: for autonomy or heteron-
omy. In other words, if we take into account that 'the very history of the
Greco-Western world can be viewed as the history of the struggle
between autonomy and heteronomy', it is obvious that the heterono-
103

mous forms of society which have dominated history cannot just be


considered as 'fortuitous events', similar to those that may not allow an

338
JUSTIFYING AN INCLUSIVE DEMOCRACY

acorn to become an oak tree. So, to assume that the possibility for
autonomy is an unfolding and therefore rational potentiality (in the dialec-
tical sense of the word) and conversely to assume away the possibility for
heteronomy as just a capacity for irrationality may easily be seen as a
104

deliberate objectivization of one possibility at the expense of the other, in


order to conceal our choice for the autonomy tradition under the cover of
dialectical 'objectivity'.
From this viewpoint, one may have serious reservations with respect to
the classical Marxist and anarchist views adopting the idea of dialectical
progress in history. Thus, it should not be forgotten that the adoption of
the idea of progress implies also the endorsement of such conclusions as the
Marxist one about the 'progressive' role of colonialism, or the corre-
105

sponding anarchist one that the state is a 'socially necessary evil'. 106

However, if we adopt the view that there is no unilinear or dialectical


process of progress nor a corresponding evolutionary process towards
forms of social organization grounded on autonomy and we assume,
instead, that the historical attempts at democracy represent a break with
the past, then, forms of social organization like colonialism and the state
can be seen as just 'social evils', with nothing 'necessary' about them, either
as regards their emergence in the past, or the form that social change has
taken since, or will take in the future.
One might conclude therefore that the logic of society's development
does not show that it is constituted to become autonomous, in the sense of
the actualization of a latent potentiality for freedom. But, if the hypothesis
of directionality in social change and of a rational historical process is
untenable, then the question arises whether it is still possible to develop an
'objective' ethics which assesses forms of social organization as 'good' or
'bad' on the basis of the degree according to which they represent the
actualization of the latent potentialities for freedom. The obvious criti-
cism, which is implied by the above analysis, is that any attempt to develop
an objective ethics based on the assumption of a process of social evolution
is little more than an effort to mask a conscious choice among the
autonomy and the heteronomy tradition, the democratic and the non-
democratic society.
Therefore, although Murray Bookchin is, of course, right in insisting
that in developing a democratic ethics we should adopt a non-hierarchical
interpretation of nature, it should not be forgotten that this is just one
107

possible form of interpretation of Nature that we consciously have chosen


because it is compatible with our choice for autonomy in the first place.
This is obviously very different from assuming that a non-hierarchical
interpretation of nature is an 'objective' one and that, as a consequence, a
democratic society will be the product of a cumulative development, a

339
TOWARDS AN INCLUSIVE DEMOCRACY

rational process of realization of the potentiality for freedom. To my mind,


social ecology's attempt to develop an objective ethics not only under-
mines its democratic credentials but also gives an easy target to statists and
irrationalists of various sorts, as is indicated by the fact that most attacks
against social ecology focus on its philosophy. 108

A democratic society will simply be a social creation, which can only be


grounded on our own conscious selection of those forms of social
organization which are conducive to individual and social autonomy. An
important side effect of this approach is that it avoids falling into the trap of
grounding the free society on 'certain' truths at the very moment when
most certainties, not only in social sciences but even in natural sciences, are
collapsing.
However, the fact that a democratic society represents a conscious
choice does not mean that this is just an arbitrary choice. This is clearly
implied by the very fact that the autonomy project turns up in history again
and again, particularly in periods of crisis of the heteronomous society.
Furthermore, the fact that heteronomous society has been the dominant
form of social organization in the past is not indicative of its intrinsic
superiority over an autonomous society. Heteronomous societies have
always been created and maintained by privileged elites, which aimed at
the institutionalization of inequality in the distribution of power, through
violence (military, economic) and/or indirect forms of control (religion,
ideology, mass media).
Finally, the grounding of a free society on a conscious choice does not
deprive us of an ethical criterion with which to assess the various forms of
social organization. In fact, the degree to which a form of social organiza-
tion secures an equal distribution of political, economic and social power
is a powerful criterion with which to assess it. But this is a criterion chosen
by us and not implied by some sort of evolutionary process. In other
words, it is a criterion which is consistent with the view that I will develop
in the next section, that the project for a democratic society can neither
be grounded on scientism and objectivism nor on utopianism and
irrationalism.

Beyond 'objectivism', irrationalism and relativism


The conclusions one can derive from the above analysis may be classified
as follows:
(a) Paradigms about social reality on which a liberatory project can be
founded may be incommensurable in the Kuhnian sense. In parti-
cular, to the extent that the formulation of such paradigms is crucially
related to the question of whether the present social system should be

340
JUSTIFYING AN INCLUSIVE DEMOCRACY

taken for granted or not, incommensurability between them is inevit-


able. The incommensurability, for instance, between the orthodox
and the Marxist paradigms on the mode of operation of the market
economy, or between social ecology and deep ecology on the causes
of the ecological crisis, is an absolute one, in the sense that it implies
109

deep differences, not just in world views, but also in the criteria/
methods for assessing theories. As Feyerabend points out:
Scientific theories . . . use different (and occasionally incom-
mensurable) concepts and evaluate events in different ways. What
counts as evidence, or as an important result, or as 'sound scientific
procedure' depends on attitudes and judgements that change with time,
professions and occasionally even from one research group to the
next.110

(b) In case of incommensurability, there are no objective criteria with


which to choose among competing paradigms, a fact which implies
that the only way to switch from one 'way of seeing things' to another
is through a process of conversion rather than through a process of
producing extra evidence, rational argument, etc., which are
paradigm-dependent methods of establishing the 'truth' of a theory.
However, it is not only the objectivity of the liberatory project that is,
at least, doubtful. The desirability of grounding it on an objective basis is
also under question. The essence of democracy, as we have seen in
Chapter 5, is not just its institutions but the fact that it is a constant process
of debating and deciding institutions and traditions. In this sense, one
111

could argue that to the extent that the socialist project is 'scientified' it
becomes part of the heteronomy tradition. A clear illustration of this
process is the case of 'existing socialism'. It was exactly the Marxist
conversion of the socialist project into an 'objective' science that contrib-
uted significantly to the establishment of new hierarchical structures,
initially in the socialist movement and, later, in society at large. The basis
of the new hierarchical structures was the social division created between,
on the one hand, the avant-garde, that was alone in an objective position
to lead the movement (because of its knowledge of the scientific truth that
Marxism embodied) and, on the other, the 'masses'. Thus, it is a well-
known historical fact that in the pre-revolutionary Marxist movements, as
well as in the post-revolutionary governments, the justification of the
concentration of power in the hands of the party elite was based on the
'fact' that they alone 'knew' how to interpret history and take appropriate
action in order to accelerate the historical process towards socialism. As
Marcuse pointed out, 'A straight road seems to lead from Lenin's "con-
sciousness from without" and his notion of the centralized authoritarian

341
TOWARDS AN INCLUSIVE DEMOCRACY

party to Stalinism'. This is so, not only because, according to Lenin,


112

workers are not able, on their own, to develop a scientific theory of


socialism, a task which historically has been left to the intellectuals, but 113

also because the custodians of the scientific orthodoxy, 'the party, or rather
the party leadership, appears as the historical repository of the "true"
interests of the proletariat and above the proletariat'. 114

Similarly, in the case of capitalist societies, it is the mystification of the


'expert' that allows technocrats to present their 'solutions' to economic or
social problems as if based on an 'objective' theory founded on 'scientific'
premises. In fact, their theory is very much based on assumptions that
presuppose the existing status quo of the market economy system and all
that this implies in terms of inequality in the distribution of resources,
income and wealth. Thus, the separation of society from the state and the
economy has converted politics and the running of the economy into an
'art' and a 'science', respectively, where 'experts' (professional politicians,
economists, etc.) play a crucial role in decision-taking. In contrast, a basic
principle on which the Athenian democracy (where there was no separa-
tion of society from the state) was founded was that in politics there is no
science but only the citizens' opinion. Thus, as Castoriadis stresses, it was
the ancient Greeks who introduced the idea that

on political affairs there is no science, in other words a systematic knowledge


based on evidence, specialized training, etc., but doxa, i.e. the opinion of
men, which should of course be trained as well, and which improves by
experience, but which is not science."115

What is the foundation of freedom and democracy?


Although, as I pointed out in Chapter 5, the connection between
freedom/autonomy on the one hand and democracy on the other can be
taken for granted, the question still remains about the foundations of
democracy, indeed freedom itself. Traditionally, most libertarians, from
Godwin to Bakunin and Kropotkin, based their ethics and politics,
freedom itself, on a fixed human nature governed by 'necessary and
universal laws', by which — in contrast to Marxists who emphasized
economic 'laws' — they usually meant natural laws. This reflected the same
nineteenth-century incentive which led Marx to develop his 'scientific'
economic laws, namely, the incentive to make the liberatory project look
'scientific' or, at least, 'objective'. However, this approach is not tenable
any more, since it is not possible today to continue talking about objectiv-
ity, at least as far as the interpretation of social phenomena is concerned.
It is not therefore accidental that some libertarians today (Benello,
Brown, Marshall et al.) question the traditional grounding of freedom on a

342
JUSTIFYING AN INCLUSIVE DEMOCRACY

fixed human nature, or on 'scientific' laws and 'objective' tendencies.


However, several of those libertarians usually link this questioning with
liberal individualistic assumptions about society. I think that such linking is
anything but necessary. If we adopt a definition of freedom in terms of
individual and collective autonomy, as we did in Chapter 5, then it is
possible to avoid the trap of objectivism without succumbing to liberal
individualism.
Furthermore, by defining freedom in terms of autonomy it is possible to
see democracy not just as a structure institutionalizing the equal sharing of
power, but, also, as a process of social self-institution, in the context of which
politics constitutes an expression of both collective and individual auton­
omy. Thus, as an expression of collective autonomy, politics takes the
form of calling into question the existing institutions and of changing them
through deliberate collective action. Also, as an expression of individual
autonomy, 'The polis secures more than human survival. Politics makes
possible man's development as a creature capable of genuine autonomy,
freedom and excellence.' This is important if we take particularly into
116

account the fact that a common error in libertarian discussions on democ­


racy is to characterize various types of past societies, or communities, as
democracies, just because they involved democratic forms of decision-
taking (popular assemblies) or economic equality.
Democracy, as a process of social self-institution, implies a society
which is open ideologically, namely, which is not grounded on any closed
system of beliefs, dogmas or ideas. 'Democracy', as Castoriadis puts it, 'is
the project of breaking the closure at the collective level.' Therefore, in
117

a democratic society, dogmas and closed systems of ideas cannot constitute


parts of the dominant social paradigm, although, of course, individuals can
have whatever beliefs they wish, as long as they are committed to uphold
the democratic principle, namely the principle according to which society
is autonomous, institutionalized as inclusive democracy.
It is indicative that even in classical Athens, 2500 years ago, a clear
distinction was made between religion and democracy. As Hansen points
out, 'there is no doubt that religion figured prominently in the life of a
Greek polis just as in an Italian citta or a German Reichsstadt, but in none of
them did the state have its root or centre in religion'. Similarly,
118

Castoriadis stresses that all the laws approved by the ecclesia started with the
clause 'εδοξε τη Βουλή και τω Δημω' (i.e. this is the opinion of the
Demos), with no reference to God. This is in sharp contrast to the Judeo-
Christian tradition, where, as the same author points out, the source of the
laws in the Old Testament is divine: Jehovah gives the laws to Moses. 119

So, although Bookchin is right in stating that 'the city's festivals inter­
mingled secular with religious themes, just as trade fain in Mayan city-

343
TOWARDS AN INCLUSIVE DEMOCRACY

states accompanied religious fairs', it is important not to forget the fact,


120

which Hannah Arendt stressed (quoting Herodotus), that whereas in other


religions God is transcendent, beyond time and life and the universe, the
Greek gods are anthropophyeis, i.e. they have the same nature, not simply
the same shape, as man. 121

So, the democratic principle is not grounded on any divine, natural or


social 'laws' or tendencies, but in our own conscious and self-reflective
choice between the two main historical traditions: the tradition of heter-
onomy which has been historically dominant, and the tradition of auton-
omy. The choice of autonomy implies that the institution of society is not
based on any kind of irrationalism (faith in God, mystical beliefs, etc.), as
well as on 'objective truths' about social evolution grounded on social or
natural 'laws'. This is so because any system of religious or mystical beliefs
(as well as any closed system of ideas), by definition, excludes the
questioning of some fundamental beliefs or ideas and, therefore, is in-
compatible with citizens setting their own laws. In fact, the principle of
'non-questioning' some fundamental beliefs is common in every religion
or set of metaphysical and mystical beliefs, from Christianity to Taoism.
Thus, as far as Christianity is concerned, it is rightly pointed out that 'Jesus'
ethics are theologically based: they are not autonomous, i.e. derived from
the needs of human individuals or society'. Similarly, Taoism (adored by
122

some anarchists today!) also explicitly condemns reasoning and argu-


mentation ('Disputation is a proof of not seeing clearly' declares Chuang
Tzu). 123

Therefore, the fundamental element of autonomy is the creation of our


own truth, something that social individuals can only achieve through
direct democracy, that is, the process through which they continually
question any institution, tradition or 'truth'. In a democracy, there are
simply no given truths. The practice of individual and collective autonomy
presupposes autonomy in thought, in other words, the constant question-
ing of institutions and truths. This could also explain why in classical
Greece it was not just democracy that flourished, but, also, philosophy, in
the sense of questioning any 'truths' given by custom, tradition or previous
thought. In fact, questioning was the common root of both philosophy
and democracy. While popular assemblies, as a form of decision-taking,
existed both before and after the Athenian ecclesia (usually having their
roots in tribal assemblies), still, the differentiating characteristic of the
Athenian ecclesia is the fact that it was not grounded on religion or tradition
but on citizens' doxa (opinion).
From this point of view, the practice of several modern libertarians of
characterizing some European Christian movements or Eastern mystery
religions as democratic is obviously out of place. For instance, George

344
JUSTIFYING AN INCLUSIVE DEMOCRACY

Woodcock's references to 'mystery religions that emerged from the East',


or to the Christian Catharist movement of the eleventh century are
completely irrelevant to the democratic tradition. Similarly out of place
124

is Peter Marshall's focusing on those philosophical currents which empha-


sized natural law (Cynics, Stoics, etc.) and his understating of the signifi-
cance of the polis as a form of social self-instituting and equal sharing of
power among citizens. No wonder that the same author, as well as many
125

anarchists today, stress the significance of mysticist and spiritualist 'philo-


sophical' currents of the East (Taoism, Buddhism, etc.). But these currents,
as Bookchin, Castoriadis and others have stressed, have nothing to do with
democracy and collective freedom, let alone philosophy, which always
consisted in the questioning of any type of law (natural or man-made)
rather than in interpreting the teachings of the masters. No wonder, also,
that in the non-democratic societies of the East, where the spiritualist
philosophies have flourished, the attachment to tradition meant that 'new
ideas were often offered as the rediscovery, or the correct interpretation, of
earlier lore . . . the focus was on how to perfect a given system, not how to
justify any system by the pure dictates of reason'. 126

But, if it is neither feasible nor desirable to ground the demand for


democracy on 'scientific' or 'objective' 'laws' or 'tendencies' which direct
social 'evolution' towards the fulfilment of objective potentialities, then
this demand can only be founded on a liberatory project. Such a liberatory
project today can only constitute a synthesis of the democratic, the
socialist, the libertarian and radical Green and feminist traditions. In other
words, it can only be a project for an inclusive democracy, in the sense of
political, economic, 'social' and ecological democracy.
Still, the fact that the project of autonomy is not objectively grounded
does not mean that 'anything goes' and that it is therefore impossible to
derive any definable body of principles to assess social and political
changes, or to develop a set of ethical values to assess human behaviour.
Reason is still necessary in a process of deriving the principles and values
which are consistent with the project of autonomy and, in this sense, are
rational. Therefore, the principles and values derived within such a process
do not just express personal tastes and desires and in fact, they are much
more 'objective' than the principles and values that are derived from
disputable interpretations of natural and social evolution. The logical
consistency of the former with the project of autonomy could be assessed
in an indisputable way, unlike the contestable 'objectivity' of the latter.

Neither 'scientism' nor 'utopianism'


The fact that the liberatory project cannot be 'scientified' or 'objectivized'
does not mean that it is just a Utopia (or, in its ecological version, an eco-

345
TOWARDS AN INCLUSIVE DEMOCRACY

topia) in the negative sense of the word. A liberatory project is not a utopia
if it is based on today's reality. And today's reality is summed up by an
unprecedented crisis of the 'growth economy', a crisis which engulfs all
societal realms (political, economic, social, cultural) as well as the Society-
Nature relationship. Furthermore, a liberatory project is not a utopia, if it
expresses the discontent of significant social sectors and their, explicit or
implicit, contesting of existing society. Today, the main political, eco-
nomic and social institutions on which the present concentration of power
is founded are increasingly contested. Thus, not only are basic political
institutions contested in various ways, as we have seen in Chapter 4, but
also fundamental economic institutions, like private property, are chal-
lenged in a massive way. The explosion of crime against property in the last
quarter of a century (in Britain, for instance, burglary has increased by 160
per cent and theft from vehicles by nearly 200 per cent since 1979), 127

despite the drastic enhancement of private and public security, is not just a
cultural or temporary phenomenon. It should be seen, instead, as a long-
term trend reflecting the creation of massive unemployment and the
massive abuse of drugs (which are also systemic phenomena) as well as the
growing discontent with the rising inequality in the distribution of income
and wealth — an inequality which, within the context of the present
consumer society, becomes unbearable.
The rejection of the view which sees the liberatory project as a
'scientific' project, or, alternatively, as a utopia, has very important
implications, as far as political organization is concerned. First, it rules out
the traditional form of hierarchical radical organization ('those who know'
and therefore have an automatic right to lead, and those who do not).
Second, it rules out the various lifestyle strategies which explicitly exclude
direct involvement in the political process. In this context, a useful
distinction could be drawn between, on the one hand, a scientific project
and a programme and, on the other, between politics and technique.
As far as the programme is concerned, it is obvious that although we do
need a programme, in the sense of a 'provisional and fragmentary con-
cretization of the projects' goals', we definitely do not need, for the
128

reasons stated above, a 'scientific' project. Supporters of 'scientific'


projects in politics (as well as 'eco-topians') are, in fact, against democratic
politics, as we defined it in Chapter 5. The reason for this hostility is the
usual inability to draw a clear distinction between politics and technique.
This inability, in fact, constitutes a common characteristic of any hier-
archical conception of politics, as the following crude representation of
Marxist politics clearly indicates:
If for more complex items like aircraft, bridges and the like we need one or

346
JUSTIFYING AN INCLUSIVE DEMOCRACY

more sciences, then to produce a new society, different from the one we suffer,
we need the most elaborate and advanced science of all, since it must deal with
the most complex organism with the most complex material, structures and
functions.129

The implicit assumption in the above extract is that as engineering,


making use of the scientific laws of physics or chemistry, produces today's
marvels of technology, in exactly the same way we could use the 'scien-
tific' laws of Marxism to produce another society! Apart, therefore, from
the very disputable fact we already considered about the feasibility of
developing such a science of social change, Marxist or otherwise, it is
obvious that this view implies a conception of politics which is utterly
incompatible with individual or social autonomy.
In this context, Castoriadis's distinction between politics as a technique
130

and politics as praxis is very useful. A technique is a 'purely rational' activity


which relies on exhaustive (or practically exhaustive) knowledge of its
domain. As, therefore, the same author puts it, 'to demand that the
revolutionary project is founded on a complete theory is in fact to equate
politics with a technique'. But politics, in the word's original Greek
meaning, belongs to a different domain, the domain of praxis 'which sees
the development of autonomy as an end and uses autonomy as a means to
this end . . . where the others are seen as autonomous beings and as the
essential factors for the development of their own autonomy'. So, 131

although praxis is a conscious activity, it can only rely on a fractional


knowledge, because there can never be an exhaustive knowledge of
humans and their history, and a provisional knowledge, because the praxis
itself leads to the continuous emergence of new knowledge. If, therefore,
the aim of politics is not, as at present, the manipulation of the electorate
and 'statecraft' but, instead, is the autonomous activity of autonomous
individuals in managing their own affairs, then what is needed is a
programme, and not a Marxist or any other 'science', with its 'iron' laws
and the implied 'engineering-view' of politics.

Neither general relativism nor irrationalism


However, discarding scientism (Marxist or otherwise) should not push us
to the alternative trap of general relativism and irrationalism. As regards
relativism, first, we should make an important distinction between political
and democratic relativism on the one hand and philosophical relativism on the
other. It is obvious that democratic relativism, i.e. that all traditions,
132

theories, ideas, etc. are debated and decided upon by all citizens, is an
essential element of democracy. The same applies to political relativism,
i.e. that all traditions have equal rights. Still, a strong case can be made

347
TOWARDS AN INCLUSIVE DEMOCRACY

against philosophical relativism, i.e. that all traditions have equal truth
value, in the sense of all being accepted as equally true or false. This is
particularly the case when philosophical relativism contradicts democratic
relativism. 133

Thus, although one may accept the post-modernist view that history
cannot be seen as a linear (Kant et al.) or dialectical (Hegel, Marx) process
of progress that embodies reason, this does not imply that we should assign
equal value to all historical forms of social organization: from classical
Athens, the Swiss cantons and the Parisian sections, to the present
'democratic' regimes. This type of general relativism, which is adopted by
post-modernism, simply expresses the latter's abandonment of any critique
of the institutionalized social reality and a general retreat to conformism, as
Castoriadis rightly points out.
134

In other words, one cannot assign equal value to the autonomy and the
heteronomy traditions, as the adoption of the latter precludes democratic
relativism itself. The very possibility of instituting democratic relativism
depends on the rejection of philosophical relativism: a conscious choice
has therefore to be made between these two traditions and the implied
conceptions of politics. It is only in this way that one may avoid the pitfalls
of scientism/objectivism, without falling into the post-modernist trap of a
general relativism that will assign equal value to all traditions.
But, once we have made a choice among the main traditions, in other
words, once we have defined the content of the liberatory project in terms
of the autonomy tradition, certain important implications follow at the
ethical level, as we have seen above, as well as at the interpretational level.
For instance, in interpreting the ecological crisis, its causes and the implied
solutions, it is impossible to accept the peculiar pluralism that, for example,
Naess proposes, since the very choice of the autonomy tradition implies
135

that only a specific set of interpretations is compatible with it. Irrespective,


therefore, of whether we choose the orthodox or the dialectical method,
or no method at all, our choice of the autonomy world view constrains us
to see the roots of the ecological crisis in terms of the hierarchical social
relations and structures which have been dominant for so long (as social
ecology does) and not in terms of the relationship between an un-
differentiated 'society' and nature (as environmentalists, deep ecologists
and others do). For the same reason, environmentalist (liberal or social-
democratic), mystical and metaphysical 'solutions' to the ecological
problem should be rejected, not because they are not compatible with
supposedly 'objective', social or natural, processes at work, but because
they could be shown to be incompatible with social and individual
autonomy, that is, incompatible with freedom itself. The problem today,
therefore, is not either to adopt general relativism, a stand that may lead to

348
JUSTIFYING AN INCLUSIVE DEMOCRACY

a post-modern conformism or, alternatively, to adopt some kind of


'objectivism'. What is lacking today is not a new 'objective' justification of
the liberatory project, but the political will to define it and take part in its
realization!
Another important issue that arises once scientism/objectivism is re-
jected is how we can avoid the retreat to the various types of irrationalism
that currently abound in the Green movement (e.g. deep ecology), the
feminist movement (some versions of eco-feminism) and so on. As is well
known, versions of irrationalism and spiritualism are frequendy adopted
widely both in the North (revival of the old religions, adoption of some
spiritualist 'fruits' from the East, like Taoism, which influence several
Anglo-Saxon anarchists, etc.) and in the South (Muslim fundamen-
talism).
In my view, the stand on relativism that was suggested above, combined
with the conscious choice of the autonomy tradition, which is implied by
democratic relativism, rules out all forms of irrationalism. This is so
because the common characteristic that the various forms of irrationalism
share is that they all lie outside the field of logon didonai (rendering account
and reason), which, as Castoriadis puts it, 'in itself entails the recognition of
the value of autonomy in the sphere of thinking' that is synonymous
136

with reason itself. In this sense, science, properly understood, is a form of


logon didonai. From the democratic viewpoint, the essence of science lies
not in its content, although of course natural sciences, by fostering a secular
approach to reality, played a significant liberatory role in subverting
religious and metaphysical beliefs; the essence of science lies in the
constant questioning of truths, i.e. in the procedures it uses to derive its
truths. Therefore, science, although from the point of view of its content
(as well as its technological applications) it may enhance either autonomy
or heteronomy (mainly the latter, given the usual heteronomous institu-
tion of society which conditions the development of science), from the
point of view of the procedures used, it has historically been an expression
of autonomy. This is because of the crucial difference regarding the
procedures used by scientists in deriving scientific 'truths', versus the
methods used by prophets, church fathers and gurus of various sorts to
create beliefs, dogmas, mystical 'truths', etc. The very fact that the
scientific procedures of finding and assessing 'truths' have so drastically
changed over time is a clear indication of the autonomous nature of the
scientific method. Scientific 'truths', as well as the procedures used to
derive them, unlike mystical, intuitional and irrational 'truths' and proce-
dures in general, are subject to constant questioning and critical assess-
ment.
By the same token, the fact that autonomy is not an 'individual' affair

349
TOWARDS AN INCLUSIVE DEMOCRACY

and it is 'decisively conditioned by the institution of society' implies that


137

the project of autonomy can only be realized through the autonomous


activity of the people, within a process of creating social institutions,
which make autonomous thinking possible, and not through some kind of
spiritual process of 'self-realization', as deep ecologists, for instance,
138

suggest. In fact, such a process of self-realization could only enhance


privacy and the withdrawal from the social process that institutes society.
A hierarchical society based on the domination of human over human
could perfectly survive the self-transformation (usually of its middle
classes) in the form of Mahayana Buddhism's enlightenment, or reborn
Christianism. It is not accidental, anyway, that self-transformation of
millions of Americans and West Europeans along these lines, in the past
decade, was fully compatible with one of the most vicious attacks by the
ruling elites that took the form of neoliberal policies (Reaganomics,
Thatcherism, etc.).

Conclusion: towards a democratic rationalism


To conclude, neither 'objectivism' nor irrationalism have any role to play
in the process that will move us towards an inclusive democracy. As I tried
to show in this chapter, democracy is incompatible with 'objectivist' types
of rationalism, similar to the ones we inherited from the Enlightenment.
Furthermore, democracy is even less compatible with irrational systems
claiming esoteric knowledge, whether from mystical experience, in-
tuition, or revelation. Democracy is only compatible with a democratic
rationalism, namely, a rationalism founded in democracy as a structure and
a process of social self-institution, as we defined it above.
Therefore, if our aim is to reach a synthesis of the autonomous-
democratic, libertarian socialist and radical Green and feminist traditions, I
think that our starting point should be the fact that the social imaginary or
creative element plays a crucial role with respect to social change. This
implies that the project for democracy may be grounded only on our
own conscious choice between the heteronomous and the autonomous
tradition.
I think that this way of thinking avoids the traps of both objectivism and
relativism. Thus, it does not fall into objectivism because the liberatory
project is not 'objectivized': democracy is justified not by an appeal to
objective tendencies with respect to natural or social evolution, but by an
appeal to reason in terms of logon didonai, which explicitly denies the idea
of any directionality as regards social change. Furthermore, it avoids
relativism because it explicitly denies the view that all traditions, as in this
case the autonomy and heteronomy ones, have equal truth values. In other
words, taking for granted that autonomy and democracy cannot be

350
JUSTIFYING AN INCLUSIVE DEMOCRACY

'proved' but only postulated, we value autonomy and democracy more


than heteronomy because, although both traditions are true, still, it is
autonomy and democracy which we identify with freedom and we assess
freedom as the highest human objective.

Notes
1. Cornelius Castoriadis, 'The era of generalized conformism', lecture given at
Boston University on 19 September 1989 in a symposium under the general
title 'A metaphor for our times'.
2. Paul Feyerabend, Farewell to Reason (London: Verso, 1987), p. 306.
3. For a definition of the liberatory project in terms of social and individual
autonomy, see Cornelius Castoriadis, L' Institution Imaginaire de la Societe
(Paris: Seuil, 1975), Ch. 2 (English translation: The Imaginary Institution of
Society (Cambridge, MA: MIT Press, 1987)).
4. Murray Bookchin, The Philosophy of Social Ecology, Essays on Dialectical
Naturalism (Montreal: Black Rose Books, 1995), p. 129.
5. See D.W. Hamlyn, The Theory of Knowledge (London: Macmillan, 1970), and
Frederick Copleston, A History of Philosophy (London: Search Press, 1976).
6. Frederick Copleston, A History of Philosophy, Vol. IV, p. 17.
7. D.W. Hamlyn, The Theory of Knowledge, pp.132-6.
8. Thomas Kuhn, The Structure of Scientific Revolutions (University of Chicago
Press, 1970), pp.191-8.
9. M. Bookchin, The Philosophy of Social Ecology, pp. 114, 130.
10. See I. Lakatos's 'Falsification and the methodology of scientific research
programmes' in Criticism and the Growth of Knowledge, Lakatos and Musgrave
(Cambridge: Cambridge University Press, 1970), pp. 93-103.
11. H. Katouzian, Ideology and Method in Economics (London: Macmillan, 1980),
p. 53.
12. Lakatos and Musgrave, The Growth of Knowledge, p.100.
13. Lakatos and Musgrave, The Growth of Knowledge, p. 103.
14. P. Feyerabend, 'Consolations for the specialist' in The Growth of Knowledge,
Lakatos and Musgrave, pp. 197-231.
15. P. Feyerabend, 'Consolations for the specialist', p. 215.
16. P. Feyerabend, Farewell to Reason, p. 9.
17. D.W. Hamlyn, The Theory of Knowledge, p. 140.
18. M. Masterman, 'The nature of a paradigm' in The Growth of Knowledge,
Lakatos and Musgrave, pp. 59-91.
19. T. Kuhn, The Structure of Scientific Revolutions, p. 175.
20. See, e.g. Kuhn's postscript in later editions of The Structure of Scientific
Revolutions and also his contribution in The Growth of Knowledge, Lakatos and
Musgrave.
21. M. Blaug, The Methodology of Economics (Cambridge: Cambridge University
Press, 1980), p. 30.
22. P. Feyerabend, Science in a Free Society (London: Verso, 1978), p. 66.
23. T. Kuhn, The Structure of Scientific Revolutions, p. 94.
24. P. Feyerabend, Farewell to Reason, p. 8.
25. For a discussion of the 'scientific' character of economics see, e.g., T.W.
Hutchison, Knowledge and Ignorance in Economics (Oxford: Basil Blackwell,
1977); Daniel Bell and Irving Kristol, The Crisis in Economic Theory (New

351
TOWARDS AN INCLUSIVE DEMOCRACY

York: Basic Books, 1981); Homa Katouzian, Ideology and Method in Economics
(London: Macmillan, 1980); Warren J. Samuels (ed.) The Methodology of
Economic Thought (New Brunswick and London: Transaction Books,
1980).
26. Lucien Goldmann, Immanuel Kant (London: New Left Books, 1971), p.
19.
27. L. Goldmann, Immanuel Kant, p. 53.
28. Murray Bookchin, 'Recovering evolution: a reply to Eckersley and Fox',
Environmental Ethics, Vol. 12 (1990), p. 2.
29. Murray Bookchin, The Philosophy of Social Ecology, p. 129.
30. M. Bookchin, The Philosophy of Social Ecology, p. 25.
31. C. Castoriadis, L' Institution Imaginaire, pp. 49—50.
32. C. Castoriadis, Philosophy, Politics, Autonomy (Oxford: Oxford University
Press, 1991), pp. 104-5.
33. Barry Hindess and Paul Q. Hirst, Pre-Capitalist Modes of Production (London:
Roudedge & Kegan Paul, 1975), pp. 313-23. See also Antony Cuder, Barry
Hindess et al, Marx's Capital and Capitalism Today (London: Roudedge &
Kegan Paul, 1977), Ch. 4.
34. Karl Marx, Preface to the first German edition of Das Capital (Moscow:
Progress Publishers/Lawrence & Wishart, 1965), pp. 8-10.
35. Vladimir Lenin, 'What the friends of the people are', in Reader in Marxist
Philosophy, H. Selsam and H. Martel (eds) (New York: International Pub-
lishers, 1963), pp. 196-7.
36. C. Castoriadis, L' Institution Imaginaire, pp.76—84.
37. Karl Marx, Theses on Feuerbach, in Karl Marx and Friedrich Engels, The
German Ideology (Moscow: Progress Publishers, 1968), p. 667.
38. Louis Althusser, Reading Capital (London: New Left Books, 1970).
39. Gregor McLennan, Marxism and the Methodologies of History (London: New
Left Books, 1981/1987), p. 22.
40. George Lukacs, History and Class Consciousness (London: Merlin Press, 1971),
p. 1.
41. G. McLennan, Marxism and the Methodologies of History, p. 15.
42. C. Castoriadis, L' Institution Imaginaire, pp. 13-20.
43. Quoted in G. McLennan, Marxism and the Methodologies of History, p. 167.
44. George Lukacs, 'Technology and social relations', New Left Review, No. 39
(1966), p. 33.
45. Peter Binns, 'The Marxist theory of truth', Radical Philosophy, No. 4 (Spring
1973), p. 5.
46. P. Binns, 'The Marxist theory of truth', p. 8.
47. Anthony Collier, 'Truth and practice', Radical Philosophy (Summer 1973), p.
10.
48. Leszek Kolakowski, Marxism and Beyond, p. 59, quoted in 'Truth and
practice', A. Collier, p. 10.
49. C. Castoriadis, L' Institution Imaginaire, pp. 40-5.
50. See, e.g. Paul Sweezy, 'Toward a critique of economics' in his Modem
Capitalism and Other Essays (New York: Monthly Review Press, 1972).
51. For a critique of this position, see G. McLennan, Marxism and the Method-
ologies of History, p. 15.
52. See Leszek Kolakowski, Main Currents of Marxism (Oxford: Oxford Uni-
versity Press, 1981), Vol. 1, p. 181.

352
JUSTIFYING AN INCLUSIVE DEMOCRACY

53. In Lenin's Materialism and Empiriocriticism, the account of knowledge given by


the author is too close to simple empiricism, as G. McLennan points out in
Marxism and the Methodologies of History, p. 11.
54. See Michio Morishima and George Catephores, Value, Exploitation and
Growth (London: McGraw-Hill, 1978), p. 297.
55. Max Weber, The Methodology of Social Sciences (Illinois: Glance, 1949), Ch.
1.
56. For a further critique of this solution, from a different viewpoint, see Leszek
Kolakowski, Main Cunents of Marxism, Vol. 1, pp. 315-16.
57. Leszek Kolakowski, Main Currents of Marxism, Vol. 1, pp. 322—4.
58. G. McLennan, also, agrees with this classification: 'As it affects substantive
issues in historical materialism Althusser's project can be described as "ration-
alism"'; G. McLennan, Marxism and the Methodologies of History, p. 28.
59. L. Althusser, Reading Capital, pp. 52-6.
60. L. Althusser, Reading Capital, p. 59.
61. G. McLennan, Marxism and the Methodologies of History, p. 27.
62. G. McLennan, Marxism and the Methodologies of History. See also P. Binns,
'The Marxist theory of truth'.
63. P. Binns, 'The Marxist theory of truth', p. 8.
64. C. Castoriadis, L' Institution Imaginaire, pp. 57-8.
65. C. Castoriadis, L' Institution Imaginaire, pp. 72-3.
66. C. Castoriadis, L' Institution Imaginaire, p. 90.
67. C. Castoriadis, L' Institution Imaginaire, pp. 184-90.
68. Louis Althusser and Etienne Balibar, Reading Capital (London: NLB, 1970),
p. 180.
69. See Roy Bhaskar, A Realist Theory of Science (Leeds: Leeds Books, 1975);
Gregor McLennan, Marxism and the Methodologies of History; and for a post-
Marxist critique of this approach, see Nikos Mouzelis, Post-Marxist Alter-
natives, Tlie Construction of Social Orders (London: Macmillan, 1990).
70. R. Bhaskar, A Realist Theory of Science, p. 250.
71. R. Bhaskar, A Realist Theory of Science, p. 248.
72. G. McLennan, Marxism and the Methodologies of History, p. 32.
73. Mouzelis, criticizing realist Marxism from a different perspective, argues that
Marxist theory is unable to overcome the dilemma 'essentialism or empiri-
cism' irrespective of the epistemological position adopted; N. Mouzelis, Post-
Marxist Alternatives, p. 29.
74. See, for instance, Albert Bergesen, 'Deep ecology and moral community' in
Rethinking Materialism, Robert Wuthnow (ed.) (New York: Erdmanns,
1995).
75. See M. Bookchin, The Philosophy of Social Ecology.
76. M. Bookchin, The Philosophy of Social Ecology, p. 20.
77. M. Bookchin, The Philosophy of Social Ecology, p. 17.
78. M. Bookchin, The Philosophy of Social Ecology, p. 31.
79. M. Bookchin, Remaking Society (Montreal: Black Rose Books, 1989),
p. 25.
80. M. Bookchin, The Philosophy of Social Ecology, p. xii.
81. M. Bookchin, The Philosophy of Social Ecology, p. xi.
82. C. Castoriadis, Philosophy, Politics, Autonomy, pp. 268-9.
83. See, e.g. Stuart A. Kaufmann, The Origins of Order: Self-organization and
Selection in Evolution (Oxford: Oxford Univeristy Press, 1993).

353
TOWARDS AN INCLUSIVE DEMOCRACY

84. C. Castoriadis, Philosophy, Politics, Autonomy, pp. 104-5.


85. C. Castoriadis, Philosophy, Politics, Autonomy, p. 34.
86. Peter Marshall, Nature's Web (London: Simon & Schuster, 1992), p. 426.
87. M. Bookchin, The Philosophy of Social Ecology, p. 79.
88. See for instance, John M. Gowdy, 'Progress and environmental sustain-
ability', Environmental Ethics, Vol. 16, No. 1 (Spring 1994).
89. For the non-neutrality of technology, see Frances Stewart, Technology and
Underdevelopment (London: Macmillan, 1978).
90. Amnesty International, A Glimpse of Hell (London: Cassell/Amnesty Inter-
national UK, 1996).
91. Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1957), Chs
14-15.
92. Konstantinos Kavoulakos, 'The relationship of realism and utopianism in the
theories of democracy of Jurgen Habermas and Cornelius Castoriadis', Society
and Nature, Vol. 2, No. 3 (1994), p. 74. See also N. Bobbio, 'Science, power
and freedom', Eleftherotypia, 18 Sept. 1995.
93. See J. Gowdy, 'Progress and environmental sustainability'.
94. See C. Castoriadis, 'The era of generalized conformism'.
95. Cornelius Castoriadis, 'The West and the Third World', lecture in Heraklion
(Crete), March 1991, in The Broken World, Cornelius Castoriadis (Athens:
Upsilon Books, 1992), p. 79.
96. For a classic description of the medieval free cities, see Petr Kropotkin,
Mutual Aid (London, 1902) CBS. V & V.
97. Murray Bookchin, personal communication to author (24/2/1994).
98. Murray Bookchin, From Urbanization to Cities (London: Cassell, 1995), pp.
111-16.
99. See Sam Dolgoff (ed.) The Anarchist Collectives: Workers' Self-management in
the Spanish Revolution 1936-39 (New York: Free Life Editions, 1974).
100. This should not be misunderstood, as some deep ecologists do at the
moment, to mean that society will change just by changing our values, or
'imaginary significations' at the individual level. The change in values has a
social significance, as far as radical social transformation is concerned, if it is
the outcome of a collective struggle, as part of a comprehensive political
programme that explicitly questions the institutional framework and the
dominant social paradigm.
101. C. Castoriadis, Philosophy, Politics, Autonomy, pp. 36-8.
102. 'What is potential in an acorn that yields an oak tree or in a human embryo
that yields a mature, creative adult is equivalent to what is potential in nature
that yields society and what is potential in society that yields freedom,
selfhood, and consciousness', Murray Bookchin, The Modern Crisis (Mon-
treal: Black Rose Books, 1987), p. 13.
103. C. Castoriadis, Philosophy, Politics, Autonomy, p. 88.
104. M. Bookchin, The Philosophy of Social Ecology, pp. 157-70.
105. See, e.g., Shlomo Avineri (ed.) Karl Marx on Colonialism and Modernization
(New York: Anchor Books, 1969), p. 13; and Anthony Brewer, Marxist
Theories of Imperialism (London: Roudedge & Kegan Paul, 1980), p. 18.
106. See G.P. MaximofF(ed.) The Political Philosophy of Bakunin (New York: The
Free Press, 1953), p. 145. See also M. Bookchin, The Philosophy of Social
Ecology, p. xvi.

354
JUSTIFYING AN INCLUSIVE DEMOCRACY

107. M. Bookchin, Ecology of Freedom (Montreal: Black Rose Books, 1991),


p. 274.
108. See, for instance, the criticisms raised against dialectical naturalism by eco-
socialists such as David Pepper (David Pepper, Eco-Socialism: From Deep
Ecology to Social Justice (London: Roudedge, 1993), p. 165); and Andrew
Light (Andrew Light, 'Rereading Bookchin and Marcuse as environmental
materialists', Capitalism, Nature, Socialism, No. 3 (March 1993), and Andrew
Light, 'Which side are you on? A rejoinder to Murray Bookchin', Capitalism,
Nature, Socialism, No. 14 (June 1993)). See also the criticisms raised by deep
ecologists like Robyn Eckersley (Robyn Eckersley, 'Divining evolution: the
ecological ethics of Murray Bookchin', Environmental Ethics, Vol. 11, No. 2
(Summer 1989)).
109. The debate between Bookchin and Fox/Eckersley is a clear example of
incommensurability. See R. Eckersley, 'Divining evolution: the ecological
ethics of Murray Bookchin'; and M. Bookchin, 'Recovering evolution: a
reply to Eckersley and Fox'.
110. P. Feyerabend, Farewell to Reason, p. 75.
111. Cornelius Castoriadis, 'The end of philosophy?' in The Talks in Greece
(Athens: Upsilon, 1990), p. 23.
112. Herbert Marcuse, Soviet Marxism (London: Roudedge, 1958), p. 145.
113. Vladimir Lenin, What Is to Be Done? (Moscow: Progress Publishers, 1967): cf.
pp. 30-2.
114. H. Marcuse, Soviet Marxism, p. 147.
115. C. Castoriadis, The Talks in Greece, p. 126.
116. Cynthia Farrar, referring to the thought of the sophist philosopher Prota-
goras. See her article, 'Ancient Greek political theory as a response to
democracy' in Democracy, the Unfinished Journey, 508 BC to AD 1993 John
Dunn (ed.) (Oxford: Oxford University Press, 1992), p. 24.
117. C. Castoriadis, Philosophy, Politics, Autonomy, p. 21.
118. Mogens Herman Hansen, The Athenian Democracy in the Age of Demosthenes
(Oxford: Blackwell, 1991) p. 64.
119. Cornelius Castoriadis, 'The problem of democracy today', Democracy and
Nature, Vol. 3, No. 2 (1996), p. 23.
120. Murray Bookchin, Re-enchanting Humanity (London: Cassell, 1995), p.
249.
121. Hannah Arendt, The Human Condition (Chicago: The University of Chicago
Press, 1958), p. 18.
122. Paul J. Achtemeier (ed.) Harper's Bible Dictionary (San Francisco: Harper &
Row, 1985), p. 481.
123. Quoted in Fritjof Capra, The Tao of Physics (London: Fontana, 1983), p.
126.
124. 'It may well be, however, that the tradition of democracy in the post-Greek
world had its obscure roots among the Catharists': George Woodcock,
'Democracy, heretical and radical', Our Generation, Vol. 22, Nos 1-2 (Fall
1990-Spring 1991), pp. 115-16.
125. Peter Marshall, erroneously identifying Nomos (i.e. the laws of the polis) with
custom and convention, points out that 'The Cynics of the third century
came even closer to anarchism . . . they alone rejected Nomos in favour of
Physis; they wished to live purely "according to Nature".... since the Greek
Polis was based on the rule of custom or convention, by rejecting Nomos, the

355
TOWARDS AN INCLUSIVE DEMOCRACY

Cynics denied the right of established authority to prescribe the limits of their
actions': Peter Marshall, Demanding the Impossible (London: HarperCollins,
1992), p. 68.
126. G.E.R. Lloyd, 'Democracy, philosophy and science in Ancient Greece' in
Democracy, John Dunn (ed.) p. 55.
127. John Prescott, Labour deputy leader, to Michael Heseltine in the Commons,
29 Jan. 1996 (The Guardian, 30 Jan. 1996).
128. C. Castoriadis, L' Institution Imaginaire, p. 106.
129. Thanasis Kalomalos, 'The crisis of Left politics and Karl Marx', Society and
Nature, Vol. 2, No. 1 (1993), p. 175.
130. C. Castoriadis, L' Institution Imaginaire, pp. 97-109.
131. C. Castoriadis, L' Institution Imaginaire, p. 103.
132. P. Feyerabend, Farewell to Reason, p. 59.
133. Even Feyerabend, a strong supporter of relativism, does not go as far as to
adopt philosophical relativism; P. Feyerabend, Science in a Free Society, pp.
82-3.
134. C. Castoriadis, 'The era of generalized conformism'.
135. Arne Naess, 'Deep ecology and ultimate premises', The Ecologist, Vol. 18,
Nos 4/5 (1988).
136. C. Castoriadis, 'The crisis of Marxism and the crisis of polities', Society and
Nature, Vol. 1, No. 2 (1992), p. 209.
137. C. Castoriadis, 'The crisis of Marxism and the crisis of polities', p. 209.
138. According to Naess, the father of deep ecology, 'The higher the self-
realization attained by anyone the broader and deeper the identification with
others', Arne Naess, Ecology, Community and Lifestyle (Cambridge: Cam-
bridge University Press, 1989), p. 196.

356
Epilogue

The collapse of 'actually existing socialism' led the Left to abandon any
idea of a free society which, as I tried to show in the preceding chapters, is
incompatible with the market economy and liberal democracy. This
particularly applies to the various forms of 'radical' democracy that are
advocated by the Left and the mainstream Greens who propose various
combinations of the market economy with liberal 'democracy' with the
aim of enhancing the civil society. The market economy is adopted
because it has supposedly proved its 'efficiency' over planning, whereas the
liberal democracy is embraced because it supposedly secures individual
autonomy.
In fact, as shown in the preceding chapters, neither of these suppositions
is valid. The market economy and the consequent growth economy are far
from efficient in securing human welfare, either in terms of satisfying even
the basic needs of the majority of the world population, or in terms of
meeting the requirements of quality of life for everybody — apart perhaps
from the 1 per cent or so of the world population which constitutes the
'overclass'. Also, liberal democracy has led to the present concentration of
power in the hands of elites who control political power with the help of
the mass media, which play a crucial role in manufacturing consent and
legitimizing the choices of the elites.'
Furthermore, as the book has attempted to demonstrate, the Left's
proposals for the enhancement of the civil society are utterly utopian in the
present context of the internationalized market economy. As long as
political and economic power is concentrated, through a system that has
built-in mechanisms to enhance this concentration further, there is no
arrangement from within the system to force radical decentralization in the
direction desired by the supporters of the civil-societarian approach. And,
as I have tried to show, the acceleration of internationalization leads to
significant changes in the economic and political structures, which only
further the concentration of economic and political power. In fact, the
present degree of internationalization of the market economy implies not
only that the model of the market economy that has the best chance of
being universalized will be the most competitive one, but also that the type
of civil society which will eventually prevail will be the one most

357
TOWARDS AN INCLUSIVE DEMOCRACY

compatible with this model. As we have seen in the preceding chapters,


this is the model which imposes the fewest social controls on markets, that
is, the most marketized one.
To put it simply, on the basis of present trends, the type of economy and
society that will become universal is not the 'social market' and/or
corporatist models of Germany and Japan, on which civil societarians
placed their hopes after the collapse of the Scandinavian model. The world
seems to be moving to a new, even cruder, world order than the present
one, which has little to do with the pious hopes of the civil-societarian Left
for a more democratic world where the various elites will be much more
accountable to the civil society than at present. This new world order
implies that, at the centre, the model that has the greatest chance of being
universalized is the Anglo-Saxon model of massive low-paid employment
and underemployment, with poverty alleviated by the few security nets
that the '40 per cent society' will be willing to finance, in exchange for a
tolerable degree of social peace which will be mainly secured by the vast
security apparatuses being created by the public and private sectors. As
regards the periphery, parts of it will continue with their present 'in-
dustrialization', creating the illusion of economic development, whereas
in fact they will be merely providing the location for cheap (in terms of
labour costs) and dirty (in terms of environmental costs) production so that
the growth economy in the centre and its bad copy in the periphery may
be reproduced.
The development of this new world order cannot be attributed to the
'greed' of neoliberals or the 'betrayal' of social democrats. "Within the
present institutional framework, the policy options of the elites (either of
the neoliberal or social-democratic variety) are severely restricted. Within
an internationalized market economy, the introduction of effective social
controls to protect the underclass and the marginalized, or to preserve the
environment, will create serious comparative disadvantages for the nation-
state or economic bloc that will embark on such policies. In this context,
with crude dilemmas such as that of 'jobs or the environment' emerging all
the time, not only the privileged '40 per cent society' but even parts of the
underclass and the marginalized could be easily persuaded that the only
realistic policies are the ones followed by their elites. And in a sense these
policies are indeed realistic. In other words, within the constraints imposed by
the institutional framework of the internationalized market economy, the
elites are right in stressing that 'there is no alternative'.
This means that the lists of institutional arrangements proposed by the
civil societarian 'Left' today in order to impose effective social controls on
the national or international markets, which, they hope, under the
pressure of an enhanced 'civil society' will one day become a reality,

358
EPILOGUE

represent nothing more than the wishful thinking of a demoralized 'Left'


that has abandoned any vision of a radical transformation of society. The
only feasible controls today are, as it has been argued in this book, those of
a regulatory character, mostly in the interest of those controlling the
economy, whereas any effective social controls in the interest of the rest of
society are not feasible any more, within the context of an internation-
alized market economy. This is why the various versions of 'radical'
democracy are much more unrealistic than the proposal for an inclusive
democracy presented in the preceding chapters.
This book has one aim and one ambition. The aim is to show that the
way out of the present multidimensional crisis can only be found from
without rather than from within the present institutional framework. The
ambition is to initiate a discussion concerning the need for a new liberatory
project and the strategies for implementing it.

Note
1. For an excellent description of this process, see Edward S. Herman and
Noam Chomsky, Manufacturing Consent, The Political Economy of the Mass
Media (New York: Pantheon Books, 1988).

359
Select Bibliography

Albert, M. Capitalism Against Capitalism (London: Whurr, 1993).


Albert, M. and Hahnel, R. Looking Forward: Participatory Economics for the
Twenty-First Century (Boston: South End Press, 1991).
Allen, G. et al. (eds) Community Education (Milton Keynes: Open U n i -
versity Press, 1987).
Allen, J. and Massey, D. (eds) Restructuring Britain: The Economy in Question
(London: Sage Publications, 1988).
Althusser, L. and Balibar, E. Reading Capital (London: New Left Books,
1970).
Amin, S. Accumulation on a World Scale (New York: Monthly Review
Press, 1974).
Amsden, A . H . Asia's Next Giant: South Korea and Late Industrialization
(Oxford: Oxford University Press, 1989).
Anderson, A. Hungary 56 (London: Solidarity, 1964).
Anderson, P. 'The affinities of Norberto Bobbio', New Left Review, No.
170 (July/August 1988).
Anderson, P. and Camiller, P. (eds) Mapping the West European Left
(London: Verso, 1994).
Anderson, P. and Davey, K. 'Communitarianism', New Statesman & Society
(3 March 1995).
Anderson, V. Alternative Economic Indicators (New York: Routledge &
Kegan Paul, 1991).
Arendt, H. The Human Condition (Chicago: The University of Chicago
Press, 1958).
Arendt, H. On Revolution (Harmondsworth: Penguin, 1990).
Argy, V. The Postwar International Money Crisis (London: Allen & Unwin,
1981).
Aristode, The Athenian Constitution, John Warrington (ed.) (London:
Heron Books, 1934).
Aristode, Politics, John Warrington (ed.) (London: Heron Books, 1934).
Armstrong, P. et al, Capitalism Since World War II (London: Fontana,
1984).
Arrow, K.J. 'Problems mount in application of free market economic
theory', The Guardian (4 Jan. 1994).

360
SELECT BIBLIOGRAPHY

Atkinson, A. et al, Income Distribution in OECD Countries (Paris: OECD,


1995).
Atkinson, D. The Common Sense of Community (London: Demos, 1994).
Auerbach, P. et al, 'The transition from actually existing capitalism', New
Left Review, No. 170 (July/August 1988).
Avineri, S. (ed.) Karl Marx on Colonialism and Modernization (New York:
Anchor Books, 1969).
Bachrach, P. The Theory of Democratic Elitism (Boston, 1967).
Bahro, R. The Alternative in Eastern Europe (London: Verso, 1978).
Bairoch, P. The Economic Development of the Third World Since 1900
(London: Methuen, 1975).
Baldelli, G. Social Anarchism (New York: Penguin, 1972).
Baran, P.A. The Political Economy of Growth (New York: Modern Reader,
1957).
Barr, N. The Economics of the Welfare State (London: Weidenfeld &
Nicolson, 1987).
Barratt-Brown, M. Models in Political Economy (London: Penguin, 1984).
Bell, D. and Kristol, I. The Crisis in Economic Theory (New York: Basic
Books, 1981).
Benello, C.G., Swann, R. and Turnbull, S. Building Sustainable Commu-
nities (New York: Bootstrap, 1989).
Bergesen, A. 'Deep ecology and moral community' in Rethinking Materi-
alism, Robert Wuthnow (ed.) (New York: Erdmanns, 1995).
Berlin, I. Four Essays on Liberty (Oxford: Oxford University Press,
1969).
Bernstein, H. (ed.) Underdevelopment and Development (Harmondsworth:
Penguin, 1973).
Berry, T. The Dream of the Earth (San Francisco: Sierra Club, 1988).
BFI, Film and Television Handbook 1993 (London: British Film Institute,
1993).
Bhaskar, R. A Realist Theory of Science (Leeds: Leeds Books, 1975).
Biehl, J. Rethinking Ecofeminist Politics (Boston: South End Press, 1991).
Biehl, J. 'Ecology and the modernization of fascism in the German ultra-
right', Society and Nature, Vol. 2, No. 2 (1994).
Binns, P. 'The Marxist theory of truth', Radical Philosophy, No. 4 (Spring
1973).
Birch, A . H . The Concepts and Theories of Modern Democracy (London:
Roudedge, 1993).
Blackaby, F. (ed.) De-Industrialization (London: Heinemann, 1979).
Blackburn, R. 'Fin de siecle: socialism after the crash', New Left Review
(Jan./Feb. 1991).

361
SELECT BIBUOGRAPHY

Blaug, M. The Methodology of Economics (Cambridge: Cambridge U n i -


versity Press, 1980),
Bleaney, M. The Rise and Fall of Keynesian Economics (London: Macmillan,
1985).
Bookchin, M. Post-Scarcity Anarchism (London: Wildwood House,
1974).
Bookchin, M. 'Municipalization: community ownership of the econ-
omy', Green Perspectives (Feb. 1986).
Bookchin, M. The Modern Crisis (Montreal: Black Rose Books, 1987).
Bookchin, M. 'Recovering evolution: a reply to Eckersley and Fox',
Environmental Ethics, Vol. 12 (1990).
Bookchin, M. Remaking Society (Montreal: Black Rose Books, 1990).
Bookchin, M. and Foreman, D. Defending the Earth, A Debate Between
Murray Bookchin and Dave Foreman (Montreal: Black Rose Books,
1991) .
Bookchin, M. The Ecology of Freedom: The Emergence and Dissolution of
Hierarchy (Montreal: Black Rose Books, 1991).
Bookchin, M. 'Libertarian municipalism: an overview', Society and Nature,
Vol. 1, No. 1 (1992).
Bookchin, M. Urbanization Without Cities (Montreal: Black Rose Books,
1992) .
Bookchin, M. 'The ghost of anarcho-syndicalism', Anarchist Studies, Vol.
1, No. 1 (Spring 1993).
Bookchin, M. Which Way for the Ecology Movement? (Edinburgh: AK Press,
1994).
Bookchin, M. From Urbanization to Cities (London: Cassell, 1995).
Bookchin, M. The Philosophy of Social Ecology (Montreal: Black Rose
Books, 1995).
Bookchin, M. Re-enchanting Humanity (London: Cassell, 1995).
Bookchin, M. 'Communalism: the democratic dimension of anarchism',
Democracy and Nature (formerly Society and Nature), Vol. 3, No. 2
(1996).
Bornstein, M. Comparative Economic Systems (Homewood, ILL: Richard
Irwin, 1985).
Bosanquet, N. After the New Right (London: Heinemann, 1983).
Boswell, J. Community and the Economy, The Theory of Public Co-operation
(London: Roudedge, 1990).
Bowles, P. and Dong, X . - Y . 'Current successes and future challenges in
China's economic reforms', New Left Review, No. 208 (Nov./Dec.
1994).
Bowring, F. 'Andre Gorz: ecology, system and lifeworld', Capitalism,
Nature, Socialism, No. 24 (Dec. 1995).

362
SELECT BIBLIOGRAPHY

Boyer, R. La theorie de la regulation (Paris: Editions La Decouverte,


1986).
Brammal, C. and Jones, M. 'Rural income inequality in China since
1978'Journal of Peasant Studies, Vol. 21, No. 1 (Oct. 1993).
Brecher, J. and Costello, T. Global Village or Global Pillage: Economic
Restructuring from the Bottom Up (Boston: South End Press, 1994).
Brewer, A. Marxist Theories of Imperialism: A Critical Survey (London:
Roudedge & Kegan Paul, 1980).
Brewer, P. Feminism and Socialism: Putting the Pieces Together (Sydney:
New Course, 1992).
Brown, A.A. and Neuberger, E. International Trade and Central Planning
(Berkeley: University of California Press, 1968).
Brown, L.S. The Politics of Individualism (Montreal: Black Rose Books,
1993).
Buzgalin, A. and Kolganov, A. 'Russia: the rout of the neo-liberals', New
Left Review, No. 215 (Jan./Feb. 1996).
Campbell, M. Capitalism in the UK (London: Croom Helm, 1981).
Capra, F. The Tao of Physics (London: Fontana, 1983).
Carley, M. and Christie, I. Managing Sustainable Development (Minneapolis:
University of Minnesota Press, 1993).
Carter, A. The Political Theory of Anarchism (London: Roudedge & Kegan
Paul, 1971).
Carter, A. Authority and Democracy (London: Roudedge & Kegan Paul,
1979).
Carter, A. Marx: A Radical Critique (Brighton: Wheatsheaf, 1988).
Castoriadis, C. Workers' Councils and the Economics of a Self-Managed Society
(London: Solidarity, 1972).
Castoriadis, C. The Ancient Greek Democracy and its Significance for us Today
(Athens: Upsilon, 1986) (in Greek).
Castoriadis, C. The Imaginary Institution of Society (Cambridge: Polity Press
and Cambridge, MA.: M I T , 1987).
Castoriadis, C. Political and Social Writings (Minneapolis: University of
Minnesota Press, 1988), Vols 1-2.
Castoriadis, C. 'An interview', Radical Philosophy, Vol. 56 (Autumn
1990).
Castoriadis, C. The Talks in Greece (Athens: Upsilon, 1990) (in Greek).
Castoriadis, C. Philosophy, Politics, Autonomy (Oxford: Oxford University
Press, 1991).
Castoriadis, C. The Broken World (Athens: Upsilon, 1992) (in Greek).
Castoriadis, C. 'The crisis of Marxism and the crisis of polities', Society and
Nature, Vol. 1, No. 2 (1992).
Castoriadis, C. Les Carrefours du Labyrinthe IV (Paris: Seuil, 1996).

363
SELECT BIBLIOGRAPHY

Cecchini, P. 1992: The European Challenge (London: Wildwood House,


1988).
Chase-Dunn, C.K. (ed.) Socialist States in the World System (London: Sage
Publications, 1982).
Chomsky, N. The Chomsky Reader, James Peck (ed.) (London: Serpent's
Tail, 1987).
Chomsky, N. Deterring Democracy (London: Verso, 1991).
Chomsky, N. The Prosperous Few and the Restless Many (Berkeley, CA:
Odonian Press, 1993).
Chomsky, N. 'Rollback I V , Ζ Magazine (May 1995).
Chomsky, N. 'On "theory" and "post-modern cults" ', Upstream Issues
(1996).
Chomsky, N. and Herman, S. Manufacturing Consent, The Political Economy
of the Mass Media (New York: Pantheon Books, 1988).
Clark, J. (ed.) Renewing the Earth: The Promise of Social Ecology (London:
Green Print, 1990).
Clark, J. 'The politics of social ecology: beyond the limits of the city'.
Unpublished paper presented at the International Social Ecology
Conference, Dunoon, Scotland (14-19 Aug., 1995).
Clark, J. 'The spirit of hope', Delta Greens Quarterly, No. 39 (Summer
1995).
Clunies-Ross, T. and Hildyard, N. 'The politics of industrial agriculture',
The Ecologist, Vol. 22, No. 2 (March/April 1992).
Collier, A. 'Truth and practice', Radical Philosophy (Summer 1973).
Common, M. Environmental and Resource Economics (London: Longman,
1988) .
Conyon, M.J. 'Industry profit margins and concentration: evidence from
UK manufacturing', International Review of Applied Economics, Vol. 9,
No. 3 (1995).
Copleston, F. A History of Philosophy (London: Search Press, 1976).
Crump, J. 'Markets, money and social change', Anarchist Studies, Vol. 3,
No. 1 (Spring 1995).
Cumings, B. 'The abortive abertura', New Left Review, No. 173 (Jan./Feb.
1989) .
Cuder, Α., Hindess, B., Hirst, P. and Hussain, A. Marx's Capital and
Capitalism Today (London: Routledge & Kegan Paul, 1977).
Deane, P. The Evolution of Economic Ideas (Cambridge: Cambridge U n i ­
versity Press, 1978).
Devall, B. Simple in Means, Rich in Ends: Practising Deep Ecology (London:
Green Print, 1990).
Dobson, A. Green Political Thought (London: Routledge, 1990, 1995).

364
SELECT BIBLIOGRAPHY

Dobson, R.V.G. Bringing the Economy Home from the Market (Montreal:
Black Rose Books, 1993).
Dolgoff, S. (ed.) The Anarchist Collectives: Workers' Self management in the
Spanish Revolution 1936-39 (New York: Free Life Editions, 1974).
Douthwaite, R. The Growth Illusion (Devon, UK: Resurgence, 1992).
Doyal, L. and Gough, I. A Theory of Human Need (London: Macmillan,
1991).
Dryzek, J. 'Ecology and discursive democracy', Capitalism, Nature, Social-
ism, Vol. 3, No. 2 (June 1992).
Dunn, J. (ed.) Democracy, the Unfinished Journey, 508 BC to AD 1993
(Oxford: Oxford University Press, 1992).
Eckersley, R. 'Divining evolution: the ecological ethics of Murray Book-
chin', Environmental Ethics, Vol. 11, No. 2 (Summer 1989).
Ehrlich, P. The Population Bomb (New York: Simon & Schuster, 1990).
Ekins, P. (ed.) The Living Economy (New York: Roudedge & Kegan Paul,
1986).
Ekins, P. Local Economic Mutual Self-reliance (London: TOES Publication,
1988) .
Ekins, P. Trade for Mutual Self-reliance (London: TOES Publication,
1989) .
Ekins, P. and Max-Neef, M. (eds) Real Life Economics: Understanding
Wealth Creation (London: Roudedge, 1992).
Ellman, M. Socialist Planning (Cambridge: Cambridge University Press,
1979).
Ellman, M. 'The increase in death and disease under "Katastroika",
Cambridge Journal of Economics, No. 18 (1994).
Ely, J. 'Libertarian ecology and civil society', Society and Nature, Vol. 2,
No. 3 (1994).
Emmanuel, A. Unequal Exchange, A Study of the Imperialism of Trade (New
York: Monthly Review Press, 1972).
Engels, F. The Role of Force in History (New York: International Publishers,
1968).
Engels, F. Anti-Duhring (London: Lawrence & Wishart, 1969).
Etzioni, A. The Spirit of Community (New York: Simon & Schuster,
1994).
Etzioni, A. 'Common values', New Statesman & Society (12 May 1995).
European Commission, The Challenges Ahead-A Plan for Europe (Brussels,
1979).
European Commission, Treaty on European Union (Maastricht, 1992).
Eurostat, Poverty in Figures (Luxembourg: Office for Official Publications
of the European Communities, 1990).

365
SELECT BIBLIOGRAPHY

Eurostat, A Social Portrait of Europe (Luxembourg: Statistical Office of the


European Communities, 1991).
Eurostat, Basic Statistics of the Community (Luxembourg: Statistical Office of
the European Communities, 1992).
Fagerberg, J. et al, 'The decline of social-democratic state capitalism in
Norway', New Left Review, No. 181 (May/June 1990).
Feyerabend, P. Against Method (London: Verso, 1975).
Feyerabend, P. Science in a Free Society (London: Verso, 1978).
Feyerabend, P. Farewell to Reason (London: Verso, 1987).
Fotopoulos, T. Dependent Development: the Case of Greece (Athens: Exantas
Press, 1985, 1987) (in Greek).
Fotopoulos, T. The Gulf War: the First Battle in the North-South Conflict
(Athens: Exantas, 1991) (in Greek).
Fotopoulos, T. 'Economic restructuring and the debt problem: the Greek
case', International Review of Applied Economics, Vol. 6, No. 1 (1992).
Fotopoulos, T. 'The economic foundations of an ecological society',
Society and Nature, Vol. 1, No. 3 (1993).
Fotopoulos, T. The Neoliberal Consensus and the Crisis of the Growth Economy
(Athens: Gordios, 1993) (in Greek).
Fotopoulos, T. 'The end of socialist statism', Society and Nature, Vol. 2,
No. 3 (1994).
Fotopoulos, T. 'The crisis of the growth economy, the withering away of
the nation-state and the community-based society' in Education,
Culture and Modernization, ed. P. Alheit et al (Roskilde, Denmark:
Roskilde University Centre, 1995).
Fox Piven, F. 'Is it global economics or neo-laissez-faire?', New Left
Review, No. 213 (Sept./Oct. 1995).
Frank, A.G. Capitalism and Underdevelopment in Latin America (New York:
Modern Reader, 1967, 1969).
Frank, A.G. 'Is real world socialism possible?', Society and Nature, Vol. 2,
No. 3, (1994).
Frank, A.G. 'Development, democracy, and the market', Society and
Nature, Vol. 3, No. 1 (1995).
Friedman, M. and Friedman, R. Free to Choose (Harmondsworth: Pen-
guin, 1980).
Galbraith, J.K. The Culture of Contentment (Hannondsworth: Penguin,
1993).
Gamble, A. 'Class politics and radical democracy', New Left Review, No.
164 (July/Aug. 1987).
Gellner, E. Nations and Nationalism (Oxford: Blackwell, 1983).
Glynn, A. 'Social democracy and full employment', New Left Review, No.
211 (May/June 1995).

366
SELECT BIBLIOGRAPHY

Glynn, A. and Sutcliffe, B. British Capitalism, Workers and the Profits Squeeze
(Harmondsworth: Penguin, 1972).
Goldmann, L. Immanuel Kant (London: New Left Books, 1971).
Goodman, A. and Webb, S. For Richer, For Poorer (London: Institute of
Fiscal Studies, 1994).
Goodway, D. (ed.) For Anarchism: History, Theory and Practice (London:
Routledge, 1989).
Gorz, A. Capitalism, Socialism, Ecology (London: Verso, 1994).
Gough, I. The Political Economy of the Welfare State (London: Macmillan,
1979).
Gowan, P. 'Neo-liberal theory and practice for Eastern Europe', New Left
Review, No. 213 (Sept./Oct., 1995).
Gowdy, J.M. 'Progress and environmental sustainability', Environmental
Ethics, Vol. 16, No. 1 (Spring 1994).
Green, D.G. Reinventing Civil Society (London: IE A, 1993).
Green, F. et al, 'Income inequality in corporatist and liberal economies: a
comparison of trends within OECD countries', International Review of
Applied Economics, Vol. 8, No. 3 (1994).
Greenpeace/ The Guardian, Ά report into the environmental forces shap­
ing our future', The Guardian (2 June 1994).
Gribbin, J. 'Climate and ozone', The Ecologist, Vol. 21, No. 3 (May/June
1991).
Guehenno, J.-M. The End of the Nation-State (Minneapolis: University of
Minnesota Press, 1995)
Habermas, J. 'Three normative models of democracy', Constellations, Vol.
1, No. 1 (1994).
Hamlyn, D.W. The Theory of Knowledge (London: Macmillan, 1970).
Hansen, M . H . The Athenian Democracy in the Age of Demosthenes (Oxford:
Blackwell, 1991).
Hawkins, H. 'Community control, workers' control and the cooperative
commonwealth', Society and Nature, Vol. 1, No. 3 (1993).
Haworth, A. Anti-Libertarianism, Markets, Philosophy and Myth (London:
Routledge, 1994).
Hayek, F. Individualism and Economic Order (London: Routledge & Kegan
Paul, 1945, 1949).
Hayes, M. The New Right in Britain (London: Pluto Press, 1994).
Heffer, Ε. Ά rallying call for Eurosocialists', The Guardian (1 Nov.
1990).
Held, D. (ed.) Prospects for Democracy (Cambridge: Polity Press, 1993).
Held, D. Democracy and the Global Order (Cambridge: Polity Press,
1995).
Henderson, H. 'Shifting gears', Resurgence (May-June 1993).

367
SELECT BIBLIOGRAPHY

Henderson, J.M. and Quandt, R. Microeconomic Theory, a Mathematical


Approach (New York: McGraw-Hill, 1958).
Hindess, B. and Hirst, P. Pre-Capitalist Modes of Production (London:
Routledge & Kegan Paul, 1975).
Hirst, P. Associative Democracy: New Forms of Economic and Social Governance
(Amherst: University of Massachusetts Press, 1994).
Hirst, P. and Thompson, G. Globalization in Question (Cambridge: Polity
Press, 1996).
Hodgson, G. The Democratic Economy (Gretna, LA: Pelican, 1984).
Hodgson, G. Economics and Institutions (Cambridge: Cambridge University
Press, 1988).
Hutchinson, T.W. Knowledge and Ignorance in Economics (Oxford: Black-
well, 1977).
Hutton, W. The State We're In (London: Jonathan Cape, 1995).
Ietto-Gillies, G. 'Some indicators of multinational domination of national
economies', International Review of Applied Economics, Vol. 3, No. 1
(1989).
International Labor Organization (ILO), Yearbook of Labor Statistics
(Geneva: ILO, various years).
International Monetary Fund, International Financial Statistics (various
years).
Jacobs, M. The Green Economy (London: Pluto Press, 1991).
Jessop, B. et al, 'Popular capitalism, flexible accumulation and left
strategy', New Left Review (Sept./Oct. 1987).
Johnson, C. The Economy Under Mrs. Thatcher, 1919-1990 (Harmonds-
worth: Penguin, 1991).
Kalomalos, T. 'The crisis of left politics and Karl Marx', Society and Nature,
Vol. 2, No. 1 (1993).
Katouzian, H. Ideology and Method in Economics (London: Macmillan,
1980).
Kaufmann, S.A. The Origins of Order: Self organization and Selection in
Evolution (Oxford: Oxford University Press, 1993).
Kavoulakos, K. 'The relationship of realism and utopianism: the theories
of democracy of Jurgen Habermas and Cornelius Castoriadis', Society
and Nature, Vol. 2, No. 3 (1994)
Kemp, P. et al, Europe's Green Alternative: A Manifesto for a New World
(London: Green Print, 1992).
Kenwood, A.G. and Lougheed, A.L. The Growth of the International
Economy, 1820-1980 (London: George Allen & Unwin, 1983).
Kohler, H. Welfare and Planning (New York: Wiley & Sons, 1966).
Kolakowski, L. Main Currents of Marxism (Oxford: Oxford University
Press, 1981).

368
SELECT BIBLIOGRAPHY

Kole, K. et al, Why Economists Disagree (London & New York: Longman,
1983).
Kropotkin, P. Mutual Aid (Boston: Extending Horizons, 1914).
Kropotkin, P. Selected Writings on Anarchism and Revolution (Cambridge,
M A , and London: Massachusetts Institute of Technology, 1970).
Kropotkin, P. The Conquest of Bread (Harmondsworth: Penguin, 1972).
Kropotkin, P. Fields, Factories and Workshops Tomorrow (London: George
A l l e n & U n w i n , 1974).
Krugman, P. 'The myth of Asia's miracle', Foreign Affairs (Nov.-Dec,
1994).
Kuhn, T.S. The Structure of Scientific Revolutions (Chicago: University of
Chicago Press, 1970).
Lakatos, I. Criticism and the Growth of Knowledge (Cambridge: Cambridge
University Press, 1970).
Lang, T. and Hines, C. The New Protectionism: Protecting the Future Against
Free Trade (London: Earthscan, 1993).
Lenin, V. The State and Revolution (Moscow: Foreign Languages Publish-
ing House, 1917).
Lenin, V. What Is to Be Done? (Moscow: Progress Publishers, 1967).
Lepage, H. Tomorrow, Capitalism, The Economics of Economic Freedom
(London: Open Court, 1982).
Light, A. 'Rereading Bookchin and Marcuse as environmental materi-
alists', Capitalism, Nature, Socialism, No. 3 (March 1993).
Light, A. 'Which side are you on? A rejoinder to Murray Bookchin',
Capitalism, Nature, Socialism, No. 14 (June 1993).
Lipietz, A. Miracles and Mirages (London: Verso, 1987).
Litde, I.M.D. Economic Development: Theory, Policy and International Rela-
tions (New York: Basic Books, 1982).
Lukacs, G. 'Technology and social relations', New Left Review, No. 39
(1966).
Lukacs, G. History and Class Consciousness (London: Merlin Press, 1971).
Lutz, M.A. and Lux, K. Humanistic Economics (New York: Bootstrap,
1988).
Maddison, A. Phases of Capitalist Development (London: Oxford University
Press, 1982).
Mandel, E. 'In defence of socialist planning', New Left Review, No. 159
(Sept./Oct. 1986).
Marcuse, H. Soviet Marxism (London: Routledge, 1958).
Marshall, P. Demanding the Impossible (London: HarperCollins, 1992).
Marshall, P. Nature's Web, an Exploration of Ecological Thinking (London:
Simon & Schuster, 1992).

369
SELECT BIBLIOGRAPHY

Martin, T. 'The end of sovereignty', Democracy and Nature (formerly


Society and Nature), Vol. 3, No. 2 (1996).
Marx, K. Critique of the Gotha Programme (Moscow: Progress Publishers,
1937).
Marx, K. Pre-capitalist Economic Formations (London: Lawrence and
Wishart, 1964).
Marx, K. Preface to the first German edition of Das Kapital (Moscow:
Progress Publishers/Lawrence & Wishart, 1965).
Marx, Κ. A Contribution to the Critique of Political Economy (London:
Lawrence & Wishart, 1971).
Marx, K. The Revolutions of 1848 (Harmondsworth: Penguin, 1973).
Marx, K. and Engels, F. Manifesto of the Communist Party (Moscow:
Progress Publishers, 1952).
Marx, K. and Engels, F. Selected Works (Moscow: Progress Publishers,
1968).
Marx, K. and Engels, F. The German Ideology (Moscow: Progress Pub­
lishers, 1968).
Mathyl, M. 'Is Russia on the road to dictatorship?' Green Perspectives, No.
34 (Dec. 1995).
Matthews, N. 'Why has Britain full employment since the war?', Economic
Journal, Vol. 78, No. 3 (1968).
Maximoff, G.P. (ed.) The Political Philosophy of Bakunin (New York: The
Free Press, 1953).
McGowan, P.J. and Kurdan, B. 'Imperialism in world system perspective',
International Studies Quarterly, Vol. 25, No. 1 (March 1981).
McKercher, W. 'Liberalism as democracy: authority over freedom', De­
mocracy and Nature (formerly Society and Nature), Vol. 3, No. 2
(1996).
McLaughlin, A. 'What is deep ecology?', Capitalism, Nature, Socialism,
Vol. 6/3, No. 23 (Sept. 1995).
McLennan, G. Marxism and the Methodologies of History (London: New Left
Books, 1981, 1987).
Miliband, R. 'Fukuyama and the socialist alternative', New Left Review,
No. 193 (May/June 1992).
Miller, D. Market, State and Community: Theoretical Foundations of Market
Socialism (Oxford: Clarendon Press, 1989).
Morishima, M. and Catephores, G. Value, Exploitation and Growth
(London: McGraw-Hill, 1978).
Morrison, R. Ecological Democracy (Boston: South End Press, 1995).
Mouffe, C. (ed.) Dimensions of Radical Democracy (London: Verso, 1992,
1995).

370
SELECT BIBLIOGRAPHY

Mouzelis, N. Post-Marxist Alternatives, The Construction of Social Orders


(London: Macmillan, 1990).
Mouzelis, N. 'Four problems regarding modernisation', To Vima (25 July
1993) .
Mouzelis, N. 'The future of the welfare-state', Eleftherotypia (1-2 Jan.
1994) .
Naess, A. Ecology, Community and Lifestyle (Cambridge: Cambridge U n i -
versity Press, 1989).
Naess, A. 'Deep ecology and ultimate premises', reprinted from The
Ecologist in Society and Nature, Vol. 1, No. 2 (1992).
Nove, A. 'The Soviet economy: problems and prospects', New Left
Review, No. 119 (Jan./Feb. 1980).
Nove, A. The Economics of Feasible Socialism (London: Allen & Unwin,
1983).
O'Connor, J. 'Capitalism, nature, socialism', Society and Nature, Vol. 1,
No. 2 (1992) (reprinted from Capitalism, Nature, Socialism).
O'Connor, J. 'Socialism and ecology', Society and Nature, Vol. 1, No. 1
(1992) (reprinted from Our Generation).
O'Connor, J. 'Democracy and ecology', Capitalism, Nature, Socialism, Vol.
4, No. 4 (Dec. 1993).
OECD, Economic Outlook (various years).
Olson, M. The Rise and Decline of Nations (New Haven, CT: Yale
University Press, 1988).
Panic, M. European Monetary Union (London: St Martin's Press, 1993).
Paparregopoulos, K. History of the Greek Nation (Athens: Seferlis, 1955),
Vols 1-7 (in Greek).
Pepper, D. Eco-Socialism: From Deep Ecology to Social Justice (London:
Routledge, 1993).
Pepper, D. Modern Environmentalism (London: Routledge, 1996).
Phillips, D. Abandoning Method (San Francisco and London: Jossey-Bass,
1973).
Plumwood, V. 'Feminism, privacy and radical democracy', Anarchist
Studies, Vol. 3, No. 2 (Autumn 1995).
Polanyi, K. The Great Transformation, the Political and Economic Origins of
Our Time (Boston: Beacon Press, 1944, 1957).
Polanyi-Levitt, K. (ed.) The Life and Work of Karl Polanyi (Montreal: Black
Rose Books, 1990).
Pollert, A. (ed.) Farewell to Flexibility? (Oxford: Blackwell, 1991).
Pollin, R. 'Financial structures and egalitarian economic policy', New Left
Review, No. 214 (Nov./Dec. 1995).
Pollin, R. and Alarcon, D. 'Debt crisis, accumulation and economic

371
SELECT BIBLIOGRAPHY

restructuring in Latin America', International Review of Applied Eco-


nomics, Vol. 2, No. 2 (June 1988).
Prokopiou, A. Athens (London: Elek Books, 1964).
Ramaswamy, V. 'A new human rights consciousness', IFDA Dossier 80
(Jan.-March 1991).
Richards, V. Lessons of the Spanish Revolution (London: Freedom Press,
1972).
Robertson, J. Future Wealth (London: Cassell, 1990).
Robertson, J. 'Economics of local recovery', Society and Nature, Vol. 1,
No. 1 (1992).
Sachs, J. 'What is to be done?', The Economist (13 January 1990).
Samuels, W.J. (ed.) The Methodology of Economic Thought (New Brunswick
and London: Transaction Books, 1980).
Sayers, S. 'Moral values and progress', New Left Review, No. 204 (Mar./
Apr., 1994).
Seabrook, J. The Myth of the Market (Devon: Green Books, 1990).
Selsam, H. and Martel, H. (eds) Reader in Marxist Philosophy (New York:
International Publishers, 1963).
Shragge, E. Community Economic Development (Montreal: Black Rose
Books, 1993).
Shulman, A.K. (ed.) Red Emma Speaks (New York: Vintage Books,
1972).
Skinner, B.F. Walden II (New York: Macmillan, 1976).
Smith, A. The Wealth of Nations (Harmondsworth: Penguin, 1970).
Smith, D. In Search of Social Justice (London: The New Economics
Foundation, 1995).
Smith, R. 'The Chinese road to capitalism', New Left Review, No. 199
(May/June 1993).
Stewart, F. Technology and Underdevelopment (London: Macmillan, 1978).
Stubbs, R. and Underhill, G.R.D. Political Economy and the Changing
Global Order (London: Macmillan, 1994).
Sweezy, P. The Theory of Capitalist Development (New York: Monthly
Review Press, 1942).
Sweezy, P. Modern Capitalism and Other Essays (New York: Monthly
Review Press, 1972).
Taylor, J.G. From Modernization to Modes of Production, A Critique of the
Sociologies of Development and Underdevelopment (London: Macmillan,
1979).
Taylor, M. Community, Anarchy, and Liberty (Cambridge: Cambridge
University Press, 1982).
Teune, H. Growth (London: Sage Publications, 1988).
Thirlwall, A.P. Balance of Payments Theory (London: Macmillan, 1980).

372
SELECT BIBLIOGRAPHY

Thurow, L. Head to Head: The Coming Economic Battle Among Japan, Europe
and America (Brealy, 1992).
Trainer, T. Abandon Affluence! (London: Zed Books, 1985).
Trainer, T. Developed to Death (London: Green Print, 1989).
Trainer, Τ. Ά rejection of the Brundtland Report', IFDA Dossier 77
(May-June 1990).
Trainer, T. The Conserver Society (London: Zed Books, 1995).
Trainer, T. 'What is development?' Society and Nature, Vol. 3, No. 1
(1995).
Trotsky, L. The Revolution Betrayed (New York: Merit, 1965).
UN Development Program, Human Development Report (New York:
Oxford University Press, 1992 and 1996).
Vallianatos, E.G. 'Subversive theory: ecology, gaiocentric sustainable
development and the third world', Society and Nature, Vol. 3, No. 1
(1995).
Voulgaris, Y. Liberalism, Conservatism and the Welfare State, 1973-1990
(Athens: Themelio, 1994) (in Greek).
Wade, R. Globalization and Its Limits: The Continuing Economic Importance of
Nations and Regions (University of Sussex: Institute of Development
Studies, 1994).
Wainwright, H. Arguments for a New Left, Answering the Free Market Right
(Oxford: Blackwell, 1994).
Wallerstein, I. The Modern World System (New York: Academic Press,
1974).
Wallerstein, I. The Capitalist World Economy (Cambridge: Cambridge
University Press, 1979).
Weber, M. The Methodology of Social Sciences (Illinois: Glance 1949).
Weiss, L. and Hobson, J. States and Economic Development: A Comparative
Historical Analysis (Cambridge: Cambridge University Press, 1995).
Whiteside, K . H . 'Hannah Arendt and ecological polities', Environmental
Ethics, Vol. 16, No. 4 (Winter 1994).
Wolff, E. 'How the pie is sliced: America's growing concentration of
wealth', The American Prospect (Summer 1995).
Woodcock, G. 'Democracy, heretical and radical', Our Generation, Vol.
22, Nos 1-2 (Fall 1990-Spring 1991).
World Bank, Development and the Environment (Oxford: Oxford University
Press, 1992).
World Bank, World Development Report (various years).
World Bank Group, Learning from the Past: Embracing the Future (Wash­
ington, DC: World Bank, 19 July 1994).
World Commission on Environment and Development, Our Common
Future (New York: United Nations, 1987).

373
SELECT BIBLIOGRAPHY

Worldwatch, Poverty and the Environment (Washington, DC: Worldwatch


Institute, 1989).
Yakovlev, Α., The Fate of Marxism in Russia (Yale: Yale University Press,
1993).
Young, A. 'Lessons from the East Asian NICs: a contrarian view', European
Economic Review, Vol. 38, Nos 3/4 (April 1994).

374
Name Index

The following index includes references appearing in the text but not those appearing in the
endnotes.

Albert, M. 97, 254, 263 Carnap, R. 310


Alexander the Great 193 Carter, A. 9, 263
Althusser, L 159, 321, 325, 326 Castoriadis, C. 180, 182, 185, 200, 209,
Arendt H. 173, 185, 195, 210, 237, 344 253,286,319, 321, 322-3, 326, 329,
Aristotle 184, 186, 189, 190, 210 333,336,342, 343, 345, 346, 347,
Arrow, K. 248 348-9
Auerbach, P. 254 Chenery, H. 124
Chomsky, N. 159,210-11,262
Chuang Tzu 344
Bacon, F. 308 Cimon 192
Bakunin, M. 74, 178, 342 Clark, D. 226
Baldelli, G. 264 Clark, J. 235-7, 276, 330
Basso, R. 172 Cleisthenes 188, 189, 190, 191
Beetham, D. 176 Clinton, B. 39, 122
Bell, D. 33-4 Collier, A. 323
Benello, C.G. 342 Comte, A. 310
Bentham, J. 177 Corridan, P. 322
Bergson, H. 317 Cumings, B. 83
Berkeley, G. 308
Berlin, I. 177 Descartes, R. 308, 317
Berry, T. 235 DryzekJ. 200
Bhaskar, R. 327 Dunn, J. 195, 196
Biehl, J. 212,279
Binns, P. 322, 326 Einstein, A. 311
Blair, T. 22 Engels, F. 18-19, 178,324
Blaug, M. 313 Esteva G. 133
Bleaney, M. 23 Etsioni, A. 228
Bobbio, N. 199
BodinJ. 195 Feyerabend, P. 312, 327, 341
Bookchin, M. 8-9, 11, 66, 179, 181, 184, Fotopoulos, T. 261, 282
185, 198, 206, 227, 230, 231,234, Freud, S. 181
235, 247, 254, 278, 286, 291, 307, Friedman, M. 178
310, 318-19, 328-9, 330, 339, 343,
345 GalbraithJ.K. 37
Brown, S. 182, 183, 201, 238, 342 Godwin, W. 342
Buchanan, J.M. 33, 34 Goldman, E. 178, 238
Buchanan, P. 100 Goldmann, L. 316—17
Bucharin, N. 324 Goldsmith, J. 100

375
NAME INDEX

Gorbachev, M. 76 Mandel, E. 251


Gorz, A. 234-5 Mao Tse Tung 78
Guehenno, J.-M. 54 Marcuse, H. 341
Gunder Frank, A. 101, 103, 104, 135 Marshall, P. 276, 330, 342, 345
Martin, T. 173, 185
Habermas, J. 159, 200, 201, 332 Marx, K. 8, 14, 65, 123, 124, 173, 187,
Hansen, M.H. 176, 179, 192, 208, 209, 197, 232, 259, 319, 320, 323,325,
210, 230,298, 343 342, 348
Harding, N. 174 Masterman, M. 313
Hayek, F. 33, 252 Maxwell, K. 311
Hawkins, H. 233, 255, 284 McKercher, W. 178
Hegel, G.W.F. 316, 328, 334, 348 McLennan, G. 321, 322, 328
Heidegger, M. 317 Menger, C. 123
Held, D. 161,205 Miliband, R. 199
Herodotus 344 Mill, J. S. 177
Hess, K. 232 Miller, D. 202
Hindess, B. 320, 322 Mises, L. von 16, 252
Hirst, P. 47, 49, 50, 161, 203, 320, 322 Moggridge, D. 20
Hitler, A. 22 Montesquieu, C.L. 231
Hobbes, T. 177, 195 Morrison, R. 279-81
Hume, D. 308,317 Mouffe, C. 201
Huntingdon, S.P. 34 Myrdal, G. 124
Hutton, W. 37, 38, 99, 249
Naess, A. 348
Jefferson, T. 195 Newton, I. 311
Jevons, S. 123 Nurkse, R. 124

Kagarlitsky, B. 82 O'Connor, J. 163, 200


Kant, I. 309,316, 348 Ostrom, E. 215
Kaser, M. 81
Katouzian, H. 311 Paparregopoulos, K. 191, 193
Keynes, J. M. 249 Parekh, Bhikhu 182, 184
Khor, M. 215 Pareto, V. 250
Kohl, H. 98 Pepper, D. 282
Kolakowski, L. 178, 323 Pericles 188, 190, 191, 192, 193, 209
Kolko, G. 85 Phillip of Macedonia 193
Korsh, K. 322 Pierson, C. 202
Kropotkin, P. 7, 11, 69, 232, 342 Pinochet, A. 83
Kuhn, T. 309, 313, 314, 320, 327, 340 Pirenne, H. 8
Plato 319
Lakatos, I. 311,312,313,314 Plechanov, G. 324
Leibniz, G.W. 308, 317 Plumwood, V. 212
Lenin, V. I. 74, 174, 197, 320, 342 Polanyi, K. 7, 10, 12, 14, 19, 20, 24, 27,
Lewis, A. 124 44, 104, 332
Lipietz, A. 127 Popper, K. 310-11
Locke, J. 177, 198, 231,317 Proudhon, P.J. 232, 259
Lukacs, G. 322
Reagan, R. 34, 83
Madison, J. 195 Ricardo, D. 118
Malthus,T. 118, 119 Rosenstein-Rodan, P. 124

376
NAME INDEX

Rousseau, J.-J. 231 Trainer, T. 113, 119, 277


Trotsky, L. 79
Sachs, J. 80, 82
Sale, K. 280
Volcker, P. 42
Saltykov, B. 75
Volsky, A. 82
Satterthwaite, D. 120
Voltaire, F. 231
Sayer, D. 322
Schelling, F. 317
Schlick, M. 310 Walras, L. 123
Simon,J. 121 Walzer, M. 159-61
Skinner, B.F. 261-2 Weber, M. 325
Smith, A. 65, 118, 195,248 Whiteside, K.H. 214
Solon 188, 189 Witte, S. 81
Spinoza, B. de 308 Wolff, R. 308
Stalin, J. 78 Woodcock, G. 344
Strange, S. 48 Woolacott, M. 147

Taylor, M. 226
Yakovlev, A. 78
Thatcher, M. 34, 36, 44
Thompson, G. 47, 49, 50, 161
Thucydides 179, 190 Zyuganov, G. 82

377
Subject Index

The following index includes references to subjects, publications and organizations discussed
in the text, but the notes at the end of the chapters have not been indexed.
aboriginal 194 on the meaning of the public realm 210
actually existing socialism ASEAN, Association of South East Asian
achievements of 75-6 Nations 43
central planning in 63, 71, 103, 263 Asiatic mode of production 123
collapse of 3, 34, 41, 45, 74, 76-8, 103, assembly/assemblies
145, 165, 139,239, 357 community 230, 244, 248, 255-69,
competitiveness and 101—2 293,296, 298, 299
democracy and 174, 175, 208, 337 confederal 230, 233, 255-69,
ecological crisis in 66 in Athens 188-92, 209, 298, 335
growth economy and 62, 64, 173—4, in Swiss cantons 208
279-80 minority 233
internationalization and 29 National 184
Marxism and 63 neighbourhood 230, 285, 298
social democracy and 45, 52, 74, 86, popular 236, 278, 343, 344
100,102 regional 233,255-69,
affinity groups 236, 276 student 212
agora 209 tribal 336,344
Albania 79 workplace 247-8, 255-69, 283, 293
anarchism/anarchists 69, 151, 163, 175, associationalism 203—4
177, 182, 183, 232, 338, 344,348 Australia 30, 87, 112
Anglo-Saxon model 116, 142, 204, 205, autonomy
358 classical meaning of 179
anthropocentrism 153 community and 226
APEC 43 cultural 51, 55
'appropriate development' approach 150, democracy and 165, 180, 350
151, 155-6 democratic rationalism and 348, 349
Arendt, Η dialectical naturalism's 'objectivism'
on Greek gods 344 versus the project of 330-1
on representative democracy 195 ethical values and 345, 348
on the 'communistic fiction' 173, 237 freedom as 176, 178, 180, 181, 182,
on the concept of rule 185 343
on the social realm 210 heteronomy versus 334, 335, 338, 339,
Aristotle 343
on election by voting 184 incompatibility with dogmas 343, 344,
on ostracism 190 348
on property as the cause of social individual and collective 55, 68,
conflict 186 179-83,201, 207, 226, 233, 234,
on Solon's reforms 189 242

378
SUBJECT INDEX

individualistic conception of 182, 183, on the non-statist character of Athenian


201 democracy 185
irrationalism and 348 on the political institutions of a
liberalism and 201 confederal organization of society
libertarian socialism and 74 230
national 52, 128 on the relation of market economy to
of European regions 97 the rise of nation-state 11
politics and 346 on the relationship of needs to scarcity
project of 144, 286, 306, 332-3, 335, 198
336,339, 349 on the sharing character of a confederal
relativism and 347, 348, 349, 350 society 254-5
science and 149, 349 Bretton Woods 27,28,33
self-management and 247 Britain
self-reliance and tradition of 241 as the marketization barometer 24
Community Economic Development in
Bakunin, M. 229
on freedom 178 crime explosion in 147, 345
on human nature 342 economic concentration in 70
on the proletarian state 74 effect of statism on cost of production in
Beveridge Report 24 31
bio-regionalism 69, 236 electorate structure change in 38
Bookchin, M. Eurodollar market and effect on
on a non-hierachical interpretation of exchange controls of 29
nature 339 film industry in 40
on a non-teleological view of evolution 'forty per cent society' in 37—8
328-9 free trade adoption by 16, 18
on consensus decision-taking 231 General Strike (1926) in 20
on dialectical 'objectivity' 318-19 Gold Standard adoption by 16
on dialectical versus analytical logic 319 income inequality in 44, 95
on dialectics as a method 307 job insecurity in 147
on lifestyle strategies 278, 291-2 'mad cow disease'in 149—50
on modern technology and confederal positivism in 308
organization 234 poverty in 131
on party cadres 286 privatization in 25, 90
on secular and religious themes in social spending in 26, 91
Athens' festivals 343 tax load redistribution in favour of the
on self-managed enterprises 247 rich in 36
on the Anglo-Saxon meaning of Tory nationalism in 52
autonomy 179 trade union membership decline in 37
on the emergence of the idea of trickle-down effect in 113
dominating nature - 66 British Institute of Economic Affairs 164
on the fact/value dichotomy 310 Brundtland Report 151-2
on the idea of a nation 9 Buddhism 344,349
on the interaction between ideological Bulgaria 77, 131
and material factors 181 budget deficit policies 22, 23
on the meaning of citizenship 235 Burma 131
on the meaning of community 227
on the meaning of state 184 Caja Laboral Popular 294
on the meaning of the public realm 206 Canada 30,35,43, 112,281
on the nature-society dualism 330 capital

379
SUBJECT INDEX

accumulation of 25, 75, 118, 124, 126, on democracy as a regime 200


210,211 on irrationalism 348—9
China and Western 85 on Marxist methodology 322-3
competitiveness of 43, 145 on objectivist rationalism 319, 326
concentration of 36, 237 on politics as a technique and as a praxis
East Europe and Western 78, 80, 81 347
European 92, 93, 95, 96,164 on postmodern conformism 347
flight of 23, 42, 98 on public space 209
freedom/mobility of 19, 32, 42, 43, 44, on the historical occurrence of the
94, 96,228 autonomy project 332
Gorz's 'transcending' of 235 on the idea of autonomy as an end in
hegemony of 34 itself 182
internationalization of 124 on the impossibility of grounding
markets liberalization 29, 35, 41, 42, 87 democracy on closed systems 343
movement of 17, 41, 42, 43 on the impossibility of scientifying
multinational 244 politics 342
socialization of 202, 229, 282 on the lack of a genuine theory of
US and Japanese capital in competition natural evolution 329
with European 96,164 on the movement to establish
capitalism democracy 286
civic 164 on the non-evolutionary character of
collectivist 240 democracy and philosophy 336
'greening' of 100, 151-2 on the non-statist character of the
historical role of 124-6, 134, 315 Athenian democracy 185
market economy and 4-6 on the relation of individual to
models of national 97 collective autonomy 180
'popular' 36,238 on the revolutionary and the traditional
primacy of the individual and 71 elements in Marx 321
realm of freedom and 199 on the source of laws in the Judeo-
social democracy and 86-7 Christian tradition and in Athens
stakeholder 97,217 343
capitalist on workers' councils 253
concentration of power 70, 71, 75 Catharists 345
culture 154 Cecchini Report 93
development 34, 125, 127, 128, 295 Chaeronea, battle of 193
economic 'democracy' 135, 238-9 chaos theory 305
economic incentives 77 Chicago School 33
elite 15,21,79,210,239 China
growth economy 62-7, 70, 77, 100-2, communist party of 111
114, 133, 172-3 dual economy in 84
ideology 111, 160 economic growth of 72, 84
market economy 79, 83 explosion of geographical disparities in
mode of production 4, 66, 125-7, 333 84-5
property relations 6, 279-80 family planning in 120-1
world economy 4 foreign investment in 80, 84
Carter, A. socialist market economy in 83-4
on authority 263 unemployment in 84
on nation-states in the Middle Ages 9 Chomsky, Noam
Castoriadis, C. on B.F. Skinner 261
on Althusserian Marxism 326 on freedom in the USA 210-11

380
SUBJECT INDEX

on postmodern theorizing 159 regulation approach and 127-8


Christianity 343-5,349 scarcity and 197
citizenship science 320,323,324
Athenian 187, 192,208 structure in the internationalized
community and 217 economy 37-8
cultural 217 state as an instrument of 163
democratic conception of 216-17 traditional politics and new structure of
eco-communitarian view of 235 38-9, 87
economic 216 working 15, 26, 34, 36-7, 38, 144, 199
instrumentalist view of 218 Clintonomics 22
liberal conception of 182, 217 Cold War 77
Marxist conception of 217 collectivism 179,180,181,183
political 216 colonialism 111, 134, 154, 338, 339
social 216 Comecon 80-1
socialist conception of 182, 217 commodity
stakeholder capitalism and 217 liberalization of markets for 41, 44, 87
city/cities neoliberal turning of labour into a 35
free medieval 7, 9, 244, 333, 337 rationality 235
mega 116, 244 relations 234, 251
movement from tribes to 336 communism 71, 158, 197, 238
regional governments 51, 173, 225, 228 communitarianism
states in Greece 175, 185, 187, 190 as a 'third' way 228
civil societarian cultural 227
approach 158-64,203,205,251 democratic 228
Left 47, 72, 176, 234, 253, 280, 357 economic 228
civil society religious 227
associated networks of 160, 161, 203 community
competitiveness and 161—2 Andre Gorz versus 234
concentration of power and 163 appropriate size of 244
defined 159 citizenship and 217
European 53 culture 229
Habermasian view of democracy and environment and 215
200 equality and 187, 226
internationalization and 116, 161, 162, inclusive democracy and 182,224
164,276, 357 John Clark versus a democracy based on
neoliberalism and 161 235
proposal for an inclusive 160 Kuhn and scientific 313-14
'radical' democracy and 200, 239 liberalism and 8
state and 162 marketization and 11, 12, 55, 225
class meaning of 225-7
communitarianism as a movement of the money, markets and 8
middle 227 movements 225, 227
growth economy and 111 nation-state versus 11
in classical Athens 189-90, 195 ownership of resources 216, 245-7
industrialism and 279 proposals 225-7
Marxist analysis of 4, 5, 78, 89, 124-5 self-determination and 136, 178
merchant 8 self-reliance 134,241-5,268,288
middle 37, 112, 132 TNCs and 135
project for inclusive democracy and totality and 317
282,286 trade and 228

381
SUBJECT INDEX

transitional strategy and 289-300 capital and exchange 21, 28, 29, 32, 35,
values 55, 158, 225, 227, 242 41,42,93
Community Economic Development 229, civil societarians and 48, 160, 161, 162,
276,283 201,206, 276, 358
Community Land Trusts 229, 293 Hayek and 252
community-oriented models homogenization of 49, 98
versus worker-oriented models 253-4 in Germany 97,204-5
competitiveness in Sweden 88
Asian Tigers and 115 internationalization and 42, 49, 99, 358
civil society and 161-2,229 market efficiency and 164
economic blocs and 43 marketization and 7, 14, 45, 50, 67-8,
environment and 164 172,183
European Union's declining 92 neoliberals and 33-4, 35, 150
German 98 price and wage 22, 23, 27
growth and 64, 103 regulatory 5, 15, 46, 48, 359
in an internationalized market economy social (broad sense) 6, 46, 164
31,87 social (narrow sense) 6,9,12, 13,15,
in the Triad 95, 144 18, 22,27, 46-7, 158
Keynesianism and 145 co-ops 200, 203, 204, 245, 246, 278, 290,
Maastricht Treaty and 94 293,294, 295,296, 297
Single Market Act and 92-3 Co-op Atlantic 281
social wage and 91 cosmopolitan model 161, 205-6
socialist statism and 101—2 cost of production
state's role on 39 economic blocs and 43
concentration social wage and 145
growth economy and power 67-73, statism's effect on the 31
103,116, 126,130, 152,157,174 trade-led growth and 31
in agriculture 150 crime
market 68 against property 345
of capital 36, 94 expansion of prison population and 147
of cultural power 40 in Russia 82
of economic power 64, 67-70, 73, in UK 147
100-4, 124, 142, 157-8, 243, 284 crisis
of income and wealth 70, 71, 120, 276 cultural 40,242
of political power 21, 52, 64, 71, 72, ecological 66-7, 116, 129, 149-51, 158,
172, 173, 196,336 215,279, 340, 348
of power 55, 66, 122, 128, 133, 154, economic 141-3, 157
163, 165, 171, 192-3, 226 fiscal 34
of production 68, 111 Great Depression 22
of social power 204 identity 146
confederal ideological 148-9
allocation of resources 248-69 in the North and the South 110
democracy 214,215,227,230-3 Left's way out of the 158-64
economy 214, 226, 234, 237-47 of 'politics' 143-6
welfare system 292 of socialist statism 73-4, 102
confederal municipalism 254, 276, 278, of the Rhine model 97-8
284 oil 32-3
confederalism 230, 241 Right's way out of the 157-8
consumerism 34, 73, 77, 82, 144, 147 social 26, 136, 146-8, 158
controls on markets 'stagflation' 32, 33, 93

382
SUBJECT INDEX

Cuba 131 transitional strategy for a radical 289


cultural deep ecology 140, 151, 152-5, 156, 275,
autonomy 51, 55, 97 276,279, 330, 340, 348
citizenship 216, 217 Delian League 191
Communitarianism 227 democracy
crisis 40, 242 as a process 200, 343
homogenization 40 as a rule 175, 185, 231
identity 4, 40, 55, 200, 208 as a set of procedures 200
imperialism 40 associative/associational 203-4
nationalism 40 Athenian/classical 182, 184, 185-94,
needs 111, 132
208, 210, 213, 216, 218, 334-6
power 40
autonomy and 180
values 154
capitalist growth economy and 172-3
culture
citizenship and 216-17
alternative 25, 277
community and 182, 225
capitalist 154
confederal 230-7
citizenship and 217
cosmopolitan model of 161, 205
community 229
deliberative 202-3
dependency 292
development and 132-6
film 40
direct 163, 186, 188, 189, 195, 199,
hire-and-fire 35
homogenization of 332 207-10, 230, 331,344
market 154 ecological 213-16,278-81,284,287
marketization of 40, 158 economic 186-8, 190, 191, 193, 194,
of individualism 144 196, 203, 209-11, 237-69, 282
socialization and 181 employee 296
white 154 foundation of 342-5
currency freedom and 182,231,344
demotic 290 Habermasian conception of 200
Euro- 32 household 213,258,291
'Euro' 43, 45, 173 human rights and 231
instability 88 inclusive 55, 111, 136, 154, 165, 176,
nation-state and national 16, 290 186,194, 202, 206-16, 226, 286
reserve 50 irrationalism and 349-50
speculation 42 liberal 53, 55, 135, 143-5, 156, 157,
Cynics 345 175-7, 182-4, 192, 194-6, 357
Czech republic 80 market 135
marketization and 172
death rates 85, 121 Marxist/Leninist 196—9
decentralization meaning of 175-6
ecological crisis and 215 parliamentary 3, 71, 143, 208, 335, 336
economic democracy and 242 people's 175
from North to South 69, 113 planning and 253, 255
of information 103,294 political 77, 135, 176, 186, 188, 190,
of production 69, 243, 248 192, 193,207-8, 237
physical versus institutional 69 radical 199-206, 224, 357-9
remaking society versus 225 rationalism and 350
self-reliant versus dependent 243-4 red-green 200
social democratic consensus and 104 relativism and 347
socialist versus market 78 religion and 343-5

383
SUBJECT INDEX

representative 162, 163, 171, 184, 195, Great 20-2, 28, 82, 148
196, 203,210,276 of 1873-76 18
scarcity and 198 deregulation 35, 88, 150, 200
social 45, 48, 52, 62, 63, 74, 85, 86-β, development
91,96, 100-4, 144, 145, 196 'appropriate' 155-7
social realm 211-13, 337 capitalist 34,125, 127, 128, 295
socialist 196 classical approaches to 117-23
socialist growth economy and 174 Community Economic 229, 276, 283
soviet 71, 174, 175,208 defined 117
statist/state 3, 55, 159, 177, 178, 185, democracy versus 132—6
186, 195, 197,231,232 ecological dimension of 129—31
transitional 282-300 growth economy and 116—17
workplace 77, 176, 202, 203, 292, 295, intensive versus extensive 77, 84, 114,
337 115
democratization Kropotkin on 69
double 205 local/community 290, 293, 294
in the periphery 82—3 Marxist/dependency approaches to
of the civil society 276 123-7
of the household 212 orthodox approaches to 124—5
of the state 199, 201 peripheral 127, 133, 134, 243-4
demos population problem and 121-2
autonomy and 179 regulation approach to 127-9
community and 226 sustainable 151-2, 154
Credit Unions supported by the 290 dialectical naturalism
currency controlled by the 290 directionality versus teleology in 326,
enterprises owned by the 291,293 328-33, 339, 350
equality and 186 law of increasing complexity and 329
means of production owned by the 211, on autonomy versus heteronomy 338-9
240, 256 potentiality and 318, 329, 338, 339
paedeia and 216 discourse theory 200
social self-institutioning and the 179 distribution of income
state versus the 186 effect of marketization on 141, 157
tax system controlled by the 290 in actually existing socialism 75
welfare controlled by the 292 in an inclusive democracy 248, 264,
demotic 267-8, 291
bank 293-5,299 in classical Athens 192, 193, 209
credit card scheme 290 orthodox economics efficiency and 250
credit unions 290 social democracy and 86
currency 290, 299 dominant social paradigm
economic sector 292, 293 defined 180
economy 292-8 growth economy and 214
enterprises 247,291,293-8 in a Marxist society 180
ownership of the means of production in actually existing socialism 173, 174
186, 240, 247, 288, 289, 297 inclusive democracy and 213, 275, 284,
tax system 290 343
welfare system 292, 299 socialization and 181
Denmark 18,91 domination
dependency development paradigm freedom and 178
116-17, 123-7 over Nature 67,111,148,153
Depression rational 333

384
SUBJECT INDEX

social 67,206 social democratic consensus and 29


sources of 67 trickle-down effect and 112
drugs 82,227,345 efficiency
definitions of 64, 102, 103, 256
ecclesia 185, 189, 190, 191, 207, 256, 343, employee democracy and managerial
344 296
eco-fascism 119, 153, 236-7, 330 information flow 78
eco-feminism 212, 348 internationalization and 93
eco-Marxism 66 marketization and 3, 46
eco-socialism 150—1, 159 massification of production and 68
economic blocs 42—3, 52, 205 neoclassical approach and 123
economic democracy social control and 164
as an element of social democracy 196 socialist growth economy and 75-7,
maldevelopment in the South and 133 103
citizenship and 216 socialist statism and 101
civil societarian concept of 203, 239 technology and 68, 101, 155
community and 240 EFTA 29
defined 186-7,238-41 Egypt 9
direct democracy and 210 elections contesting 283, 284, 285, 293
ecological democracy and 215 elitism 183
freedom of choice and 238, 249, Emilia-Romana 294
251-69 empiricism 306-11, 316, 318, 319, 322,
greens' concept of 239 324-6
in aboriginal American communities Employee Stock Ownership Plan (ESOP)
194 295
in an inclusive democracy 209-11, enclosure(s)
255-69 in the South 154
in classical Athens 176, 186, 188-94,
movement in England 119
210
of communal lands in Western Europe
in the Spanish civil war 335
12
industrial revolution and 13
of upper classes today 37
market democracy and 135,337
energy
neoliberal concept of 238
preconditions of 237—55 consumption levels 142,143
scarcity and 238 efficient use of 152
state socialist concept of 239 local sources of 241, 242
transitional strategy for 289-300 nuclear 143
economic growth programmes in an inclusive democracy
as a liberal and socialist objective 63 290, 291
concentration and 124 renewable forms of 215, 216
in actually existing socialism 62, 64 Engels, F.
in Asian Tigers 115 empiricist tendency in the writings of
internationalization and 93 324
limits of 148 on freedom 178
mercantilists and 118 on nation-states 18-19
Nature and 148 England
neoclassical and 123 emergence of economic liberalism in
poverty and 151 15-16
Progress and 52, 65, 71, 73, 100, 140, enclosure movement in 119
148, 152, 242 marketization in 10, 12, 15, 16, 18

385
SUBJECT INDEX

Enlightenment 65, 73, 140, 148, 152, 332, trend towards a federal state in Western
333, 350 51,53
environmentalism 40, 150-51 European Commission 52, 92, 172
epistemological fallacy 320, 322 European Economic Community (EEC)
equilibrium liberalization of markets and the 29
tendencies 124, 142 poverty in the 112
theory of general 248-9 European Monetary Union (EMU) 44, 98
ethics European Union (EU)
anarchist 342 common currency in the 43
Christian 344 convergence within the 95-6
democratic 178,339 declining export share of 92
'objective' 180,318,339 falling competitiveness of 92
socialist 100 inter-regional and intra-regional trade
'Euro' 43,45 99
Euro-centrism 123, 153, 182 loss of state's economic sovereignty
within the 42
Euro-dollar market 29, 32
Mondragon and Spain's integration into
Europe
297
autonomy project in medieval 333
neoliberal marketization within the 43,
capitalist market economies in East
45,51,94
79-83
proposals for political integration within
concentration of power in Eastern 21
the 51-3
democratization of Eastern 83
social market in the 97-100
development of modem 'democracy' in
social wage in the 91, 94
183-4
trade with ex-Comecon countries 80
economic systems in Western 7 wage differentials in the 43
enclosure movement in Western 12 evolution
expansion of exports in 28 as ethical Progress 332
human rights in 331 dialectics and 319, 345
idea of growth formulated in 14 economic 5, 320
import penetration in 28, 41 natural 328,329
Latinamericanization of Eastern 81 social 73, 125, 149, 180, 307, 315, 328,
liberalization of commodity markets in 329,332, 339, 343, 345
43 towards democracy 331, 333, 336, 337,
market economy's emergence in 5, 12 350
marketization in Eastern 51 exports growth 28, 30, 41, 69, 95, 189
marketization of central 80
Mediterranean 43, 243 falsificationism 308,311,312
municipal confederacies in 9 farmers/peasants
neoracism in 55 concentration in 150
new protectionism in 99 dependence on agro-chemical TNCs
of regions 51, 55 131,150
post-Maastricht 96, 145 enclosure movement and 119
profitability in OECD 32 GATT and 242
rationalism's emergence in 308 in China 85
social democratic parties in 39, 74 intensive 149
social market in 97-100 'mad cow disease' and British 149-50
socialist movement's emergence in 73 modern agribusiness and 242, 286
socialist growth economy in Eastern 74, new class structure and 286
79 feminism 39,212,218,345,348,350

386
SUBJECT INDEX

fertility rates 120, 121, 122 potentiality for 333, 338, 339
feudalism 7, 9, 10, 12, 148 realm of 159, 173, 197-9
film industry 40 scarcity and 198, 269
flexible labour markets 34-6, 43, 44, 94, socialist conception of 178, 232
95,141,142,147
Food and Agriculture Organization (FAO)
GATT/WTO 6, 29, 35, 41, 172, 242
131 Germany
foreign investment 80, 98, 135 Gold Standard adopted by 16
'forty per cent society' 37-40, 47, 72, 95, Nazi statism in 22, 23
110,112,132,142, 144, 338 protectionism in 18
France Rhineland model of stakeholder
Gold Standard adopted by 16 capitalism in 97-8, 204, 217, 225
marketization in 18 trade openness in 50
pre-war Popular Front Government in glasnost 79
23 globalization versus internationalization
social liberalism in 38, 162 46-50
trade openness in 50 Gold Standard
Frankfurt school 332 as one of the foundations of a self-
freedom regulating market 16
anarchist conception of 178 central banks and 16
as the highest human objective 350 European Monetary Union and 43, 45
civil societarian conception of 199, 201 protectionism and 19
classical Greek meaning of 179 statism and collapse of 20
compatibility with socialist statism of Greater London Council 163
181-2 Greece
compatibility with liberal individualism ancient 175, 194,336,344
of 181-2 modern 30, 38, 43, 112, 144, 292
concentration of power and 183 Green movement 39, 51, 66, 96, 99, 151,
defined in terms of autonomy 179-80, 162,276, 307,357
342 greenhouse effect 120, 149, 152
democracy and 180, 194, 231, 342 'greening' capitalism 100, 152
directionality towards 331 Group of 7
expansion of ideals of 337 break of Comecon ties by the 80
fiscal 95 carbon dioxide emissions by the 130
foundation of 342 concentration of power in the 172
from want 13 export share in the 69
human nature and 342 growth of imports in the 41
individual and collective 179, 181 Lille jobs summit (1996) of 142
individualistic conception of 178 manufacturing employment in the 37
liberal conception of 177, 194, 231 unemployment in the 35
Marxist conception of 178 growth economy
negative and positive conception of Asian Tigers and 114-16
177-8 causes of fall of socialist 73—9
of capital 19,94 classical theories on the 117-19
of choice 198, 237, 238, 249, 252, 254, concentration of power in a 67—73,
255-7, 259, 261,269, 298 100, 111-12, 126, 154
of contract 16 defined 3
of labour 95 democracy and capitalist 33, 172-3
of trade 19 democracy and socialist 173—4
political and economic 210—11 development and 113, 116—17

387
SUBJECT INDEX

ecological crisis and 66-7, 126, 129, interaction of autonomy with 334-5
149-51, 153, 158,214 qualitative difference between autonomy
emergence of 14, 62, 65 and 334
Euro-centric character of 153 relativism and 347, 350
Far Eastern 'socialist' 83—4 scientification of the liberatory project
growth ideology and 62, 65—7 and 341
growth society and 147 social 'evolution' and 329-30, 334
industrialism and 280 social possibility for 338
inequality and 48 hierarchical
internationalization of 30, 31, 41, 46, co-ops in Mondragon 237
134 conception of politics 346
market economy and 17, 48, 55, 332 division of labour 243
principles of organizing production in a interpretation of Nature 339
101-2 organization of production 101, 155
Progress and 123, 148,243 organization of radical movements 346
prospects of Eastern European 76, patterns of power concentration 66
79-83 relations 4, 146, 207, 215, 288, 348
reproduction of 46, 48, 53, 72, 115, society 26, 66, 67, 71, 72, 73, 116, 140,
130,148 148,288,315,349
socialist ethics and 103-4 structures 40, 78, 101, 102, 150, 185,
spreading in the South of the 69, 227, 242, 263, 266, 293, 341
110-14, 124, 126, 133, 135 Holland/Netherlands
steady-state economy versus 152-3 free trade policies adopted by 16, 18
types of 62, 63-5 trade openness in 50
growth ideology Hong Kong 114
crisis of 148 human nature
defined 65 anarchist view of 342
ecological crisis and 66 freedom and 180
economic theory and 118 liberal view of 194
rise of 65, 214 Hungary 80,81
market economy and 62, 118
Marx and 123, 199 Iberian Anarchist Federation (FAI) 236
socialist growth economy and 65 identity
South and 111 crisis of 146
guilds 7 cultural 4, 40, 55, 208
Gulf War 51 movements 55
national 53
Haiti 135 idealism 181,235
Hayek, F. ideology
neoliberal insurrection of 33 capitalist 160
on the information problem in planned growth 62, 63, 65-7, 83, 111, 116, 118,
economies 252 123, 134, 148, 154,214, 279
heteronomy liberal/neoliberal 66,111,135
autonomy as a rupture with the tradition nationalist 11, 160, 217
of 331,335 of dominating Nature 111, 154, 213
forms of 334, 337 social democratic 40
Gorz on 234 republican 159
historical societies and 330, 332 socialist 66, 111, 159
history as the struggle between imaginary
autonomy and 338 element in History 326, 329, 336, 350

388
SUBJECT INDEX

institutions 134, 332 maldevelopment and 134, 249, 250


significations 65, 135, 148, 333, 335 marketization and 9, 44, 113, 158, 250
IMF 45, 79, 100, 172, 225 infant mortality 113,131-2
imperialism 18, 20, 40, 125, 127 information
import penetration 28, 31, 41 decentralization of 103, 294
incentives feedback in an inclusive democracy
material versus ideological 78, 102 247, 257
soviet absence of work 77 flow efficiency 78, 252, 253
tax cuts as 36 revolution 33, 36
incommensurability system 248
between conceptions of objectivity 319 intermediate goods 266
between orthodox and Marxist International Labor Organization (ILO)
economics 315, 340 142
between paradigms 308, 314 internationalization
between social and deep ecology 340 as the cause of statism's collapse 28-33
index of desirability 263-5 capital markets and 41-2
India 120, 121, 122,249 civil society and 161-2, 276
individualism commodity markets and 41
actually existing socialism and 102 concentration and 116,357
collectivism versus 180-3 confederalism versus 52
existential versus instrumental 182, 183 defined 46
freedom and 178-9, 181 European integration and 91—2
libertarianism and liberal 182, 231, 342 globalization versus 46-50
methodological 324 information revolution and 36
neoclassical economics and 123 marketization and 4, 96
neoliberalism and culture of 144 nation-state and 3, 50-1, 54
New Right and 33 neoliberalism and 41, 104, 228
industrial revolution 8, 12, 13, 15, 24, 62, politics and 144, 276
65,73, 104, 118,280 representative democracy and 276
industrialism 8, 70, 155, 278-80 social controls and 4, 161
inequality trade and 99
as condition for the reproduction of the internationalized market economy
growth economy 72, 142 Asian Tigers and 115
economic democracy and 209, 288 capital markets in the 35
crime and 346 civil societarian approach and 161-2,
equal rights and 232 202-3, 205
in actually existing socialism 75 class divisions within the 37
in an inclusive democracy 211,263, commodity markets in the 35
267 communitarianism and 229
in Britain 95, 113 Community Economic Development
in China 72, 84, 85 (CED) and 230
in classical Athens 186, 192, 193, 194, conditions for the success of an 44
196 decentralization within the 243
in OECD countries 157 East Europe and 75, 76, 78, 80
in Russia 76 ecological crisis and 216
in the household 212 economic blocs and 42
in the South 113 first attempt for an 17, 44
in USA 141, 158,211 Gold Standard and 17
increase in global 142, 158 Habermasian view of democracy and
industrial revolution and 9 200

389
SUBJECT INDEX

in west Europe 92 on the 'consecutive development of


institutionalization of 29 nations' 69
liberal and neoliberal forms of 49 on voluntary agreements 232
loss of state's economic sovereignty in
the 42
labour theory of value 261
new protectionism and 99
Labour Party of Britain 22, 89, 227
North-South divide and 131
laissez-faire 115, 118,232
radical democracy approaches and
Laos 63, 83,111
204-6, 224
Left
role of state in an 46
civil societarian 47, 74, 158-64, 357,
Russia's integration into the 81
358
social controls within an 46, 49, 161,
collapse of actually existing socialism and
358
the 357
social expenditure and 91
decline of the 34
social liberalism and 88
libertarian socialism and the 74, 253
stakeholder capitalism and 218-19
Marxist 197
statism and 115
New 86, 145
irrationalism 40, 306, 330, 340, 343,
Old 25
347-9
politics 145
Italy 43, 144,294
socialist statism and the 74
vision of 'radical' democracy 224, 357
Japan Lenin, V.
Anglo-Saxon model and 358 on democracy 174, 197
Asian Tigers and 115 on objectivity 320
competitiveness of 92 on socialist consciousness 342
export share of 92 on the proletarian state 74
hegemony of US dollar and 28 Leninism 85, 101, 144, 175, 305
growth decline in 115 liberal
Kohsetsushi of 294 approach on the collapse of actually
Rhineland model and 99 existing statism 76
Seikatsu of 281 conception of citizenship 217
trade openness in 50 conception of democracy 194-6
unit labour cost in 98 conception of freedom 177, 196, 232
job complexes 262, 263 conception of human rights 217, 232
job insecurity 75, 141, 147 definition of development 117
Jordan 131 environmentalism 150,313
individualism 182, 183, 232, 342
internationalized market economy 3,
Kantianism 183,309,316,321,326 17, 49
Kenya 131 nationalism 18
Keynesianism Old Right versus neoliberal New Right
European versus national 92, 96 33
neoclassical trend versus 27 oligarchy 54, 83, 176, 202, 336
social democracy and 74-5 phase of marketization 11, 15, 44, 47,
Kohsetsushi 294 172
Korea (South) 69, 114,243 philosophy 177, 195, 232
Kropotkin, Petr liberalism
on ethics 342 anarchism/libertarianism and 182—3
on pre-market economy markets 7 concentration of power and 71
on state versus free towns 11 democracy and 195-6

390
SUBJECT INDEX

economic 8, 15-17, 18, 201 labour 12, 13, 14, 16, 17, 27, 32, 34,
environmentalism and 151 35, 43, 45, 97, 98, 141
instrumental 201 liberalization of 35, 141, 157, 158
laissez-faire versus 39 local versus national 8, 10, 11, 291, 297
national 18 mechanism 14, 16, 20, 21, 71, 72, 76,
political 71,201 104,134,248-50, 259
pure 20,47 money 27, 88
social 41,47,85-91, 143, 162 'nationalization' of 10,11,54
socialism and 63, 151, 179, 180, 200, pre-'market economy' 7-8
228,319 regulated versus self-regulated 7, 8, 10,
liberalization 12, 13, 15, 16, 24, 39, 44, 45, 47,
cultural homogenization and market 40 97
distribution of income and 141 social 97-100
international borrowing and market 42 social controls on 7, 9, 11, 13, 15, 18,
of capital markets 35 22, 27, 34, 42, 44, 46, 98, 99, 150,
of commodity markets 43 162
of labour markets 34-5, 43, 141 socialism 202, 203
Right's proposals for further 157-8 sovereignty 173
Russian market 82 trade and 8
libertarian values 55, 146, 242
concept of freedom 178 market economy
ecology 276 Andre Gorz and 234
ethics 342 as a system 3,7, 10, 14, 111
individualism 181-2, 238 capitalism and 6
municipalism 291 civil societarians and 160, 162, 164
conception of politics 186 communitarianism on the 228
socialism 74, 151,253,286 competitiveness and 102
society 260 concentration and 69, 73, 156, 158, 183
tradition 218,345,350 culture and 7, 154
lifestyle strategies 276-8, 346 defined 4—5
East European 75, 76, 79-83
Lille jobs summit of G7 (1996) 142
economic democracy and 337
localism 12, 54, 156, 227
emergence of 7, 10-14, 19, 104, 172,
Lubeck 185
210
employment and 141
Maastricht Treaty 6, 45, 53, 92, 93, 94, freedom of choice in a 249
95, 96, 98, 145 general equilibrium in the 248—9
maldevelopment 134, 246, 249, 250, 288 Great Depression and 20, 22-4
Mantineia, battle of 193 grow-or-die dynamic of 29, 52, 62, 65,
marginalist revolution 123 83, 84, 99, 110, 128
market(s) growth economy and 55, 62, 64, 100
bond 42 growth ideology and 62, 65
capital 6, 29, 35, 41, 42, 43, 87, 93 hierarchical society and 71
'democracy' 135 industrialism and 12
deregulation of 35, 40, 88 internationalization of 29, 31, 32, 33,
Euro-dollar 29, 32 41, 44, 46, 48, 53, 87, 92, 96, 128,
European 6, 40, 91 144,228
financial 32, 35, 47, 99 John Clark and 237
flexible/free 17, 18, 36, 44, 94, 96, 124, 'maldevelopment' and 134
142 nationalized industries and 102

391
SUBJECT INDEX

nationalism and 19 Rhine model and 97


nature and 150, 153, 155, 158 social controls and 67
openness of 49 social crisis and 146
orthodox economics paradigm and 124 Stalinist Russia and 21
orthodox economists and 249 statist phase of 21-33
planned economy and 64 trade and 10, 17
price distortions in a 252 trickle-down effect and 113
protectionism and 19, 99 Marx, Karl
self-managed enterprises and 246 Eurocentrism of 123
social controls on the 5-6, 49, 50 on economic growth 65, 123
social crisis and 146 on human rights 232
social struggle in a 15 on spreading of capitalism 124
socialism and 100, 251 on the 'science' of socialism 319, 320,
'socialist' 6, 64, 78, 79, 83-5 323, 325, 342
South and 69,110,111,119,133,134, on the ancient Greek city 187
135, 142
on the nation-state 8, 173, 197
stakeholder 218,225
on the value of commodities 259
state and 39,46,47,51
Polanyi and 14
technology and 155
progress and 347
market-oriented models 251-2
Marxism
marketization
actually existing socialism and 63
colonialism and 111, 134, 154
Anglo-American 324
community values and 55, 158, 225,
as 'science' of socialism 148, 154, 321,
242
323,324, 341,346
concentration of economic power and
as method 322
68, 252
defined 7 as philosophy 321, 322
democracy's incompatibility with 172 concentration of power and 71
Eastern European 51 instrumentalist 183
emergence of 10 liberalism and 319
environment and 130,164 positivistic 323, 324
European Union and 94 realist 326
industrialism and 8 social ecology and 307
inequality and 44, 157, 158 socialist statism and 74, 102, 151
insecurity and 147 structuralist 321,325-26
internationalization and 4, 28, 44, 48, materialism 181,214
52, 337 dialectical 306, 321, 323
liberal phase of 14-21 historical 326
nation-state and 11 mercantilism 10, 11, 12, 117, 118
neoliberal phase of 33-45 MERCOSUR 43
New Right and 157 methodological monism 327
North-South divide and 128, 132 Mexico 43, 133, 243
not an evolutionary process 10 Middle Ages
of communications 40 markets in the 7—8
of culture 40, 158 nation-states in the 9-10
of labour 12, 15, 147 minorities 26,37,211,231,233,249,
of land 12, 15 287,331
of society 13,41,44,55, 158 Mises, Ludwig von
peripheral 142 on central banks 16
protectionism and 17-18 on planned economies 252

392
SUBJECT INDEX

mixed economy 26, 39, 48, 49, 72, 75, nature


78, 251 democracy and 154,213-16
mobility first and second 215, 329
of capital 42,43,93 free 329
of labour 15,43,248 growth ideology and 111,153,199,
Mondragon 237, 246, 247, 291, 294, 296, 213
297 instrumentalist view of 67, 153, 214
money society and 52, 63, 66, 67, 73, 148, 330
community and 8 needs
demotic 290 basic 64, 89, 90, 111, 136, 143, 217,
inclusive democracy and 268, 282 249, 254, 256-8, 290, 292,299,
liberalization/deregulation of markets 357
for 42, 88 consumer 82
marketization of 12 cultural 111, 132
needs versus wants backed by 249—50, local 289
256 non-basic 225,254,259-62
speculative 35 'objective' 117, 156, 198, 256
statism's controls on markets for 27 satisfiers and 256-7
vouchers versus 257, 261 scarcity and 198, 238
Multi-/Trans-national Corporations 29, neo-classical school 27, 123, 124, 125
32, 47, 48, 68-70, 88, 96, 99, 114, neo-Darwinian synthesis 329
135,225,243 neoliberal
muslim fundamentalism 348 character of EU 91-7
internationalized market economy 47,
NAFTA 41,42,49,99 48,51, 131, 146, 157,235
nationalized enterprises 25, 29, 246 movement 33—6
nation-state(s) phase of marketization 33-45, 243, 250
civil society and 239 policies 35, 36, 38, 41, 45, 80, 95, 349,
economic sovereignty of 4, 28, 32, 42, 358
173 neoliberal consensus
emergence of 3, 8-10, 183 at the cultural level 40
internationalization and 46-56 at the economic level 39
market economy and 8-10, 11, 13, 18, at the ideological level 40
99 at the political level 39
nationalism and 11, 19, 51 at the social level 39
politics and 53-5 civil societarian approach and 162
regional differences and 43 European Federation and 52
relations between confederations and European Union and 53, 91, 94
284 'forty per cent society' and 39-40
today's significance of 47-8, 50-4, 88 in Sweden 87-8
world system and 126 marketization and 44
nationalism not a conjunctural phenomenon 45, 49
cultural 40 post-modernist movement and 41
in Eastern Europe 51, 82 social crisis and 146
internationalism versus 51 social liberalism and 87
liberal 18 socialist statism and 80-6
market economy and 16, 19 social democrats and 86, 145
modernity and 19 neoliberalism
protectionism and 17—19 adoption by international institutions
NATO 51 45,125

393
SUBJECT INDEX

civil society and 161 versus intersubj ectivity 312-16


community values and 55, 144 OECD
laissez-faire versus 39 concentration of production in 112
neoclassical economics and 125 distribution of GDP in 31
not a conjunctural phenomenon 45 growth rates in 30
post-modernism and 148 liberalization in 36
rise of 33-6 on Comecon fragmentation 81
underclass and 144 on inequality 158
neo-Malthussians 119 on the Anglo-Saxon model's superiority
Nepal 131 142
New Age 236,278 profitability in 32
'New' North and South 132, 136 oil crisis 32, 33
new social movements 74, 201 oligarchy
New Zealand 30, 112 economic 135, 210
North-South in Athens 187-9, 196
Asian Tigers and 114—16 liberal 54,83,202,336
concentration and 142, 157, 225 political 176,208,335
conventional approaches on openness
development of 117-29 financial 32, 50
democracy and 132—6 trade 32,49,50
development problem and 110 orthodox development paradigm 124—5
'forty per cent society' and 72, 132 ostracism 190
historical gap between 69 overclass 37, 147,286,357
irrationalism and 348 ownership of productive resources
market/growth economy and 111-14, allocation versus 245
116,133, 135 control versus 245
'new' 113, 131-2, 136 demotic 186, 240, 245-7, 289, 297
population pattern in 119-23 private/capitalist 6, 13, 66, 70, 79, 239,
poverty in 112, 119 245, 288
trickle-down effect and 113, 122 social 6, 84, 199, 202, 246, 247, 251
widening gap between 112, 157 state/socialist 70, 79, 84, 174
Norway 30,86,87, 112
paedeia 209,214,216,231,234
objectivism paradigm
basic needs and 156 democratic 213, 275, 282
irrationalism and 348, 349 dependency 125-6
liberal individualism and 342 dominant social 63, 173, 174, 180, 181,
liberatory project and 340 214,284, 343
post modern subjectivism/relativism ecological 140, 150
versus 305-6,348,350 incommensurability 308, 314, 315, 319,
scientific 326 326,340
objectivity Marxist 125-6,315
dialectical 316-20 orthodox 124, 315
dialectical naturalism and 328-40 scientific 313-14
Marxist 320-28 Parisian sections 209, 332, 335, 348
notion of 314 Peloponnesian War 188, 193
of the liberatory project 340-50 perestroika 78—9
orthodox 306-12 Persian Wars 191, 192-3
realist 326-8 philosophy
scientific 310 as a closed system 321

394
SUBJECT INDEX

democracy and 336, 344 autonomy and 342


Kant's 316 classical conception of 185, 216, 347
liberal 177 crisis of traditional 143-6
Marxism-as 321,322 crisis of Left 145
New Right's versus Old Right's 33 deliberative 200
of economic liberalism 8 end of 53-6
of history 181,326 hierarchical conception of 346
of liberal nationalism 18 libertarian definition of 185
of positivism 309 Marxist 346
of science 306, 310, 312, 316, 319, 323 of individualism 238
of social ecology 339 republican 159
political 319 science and 342, 346
physiocrats 117, 118 socialist 305
planability 76, 77 statecraft versus 173, 347
planning Portugal 30,43, 112
central 21, 63, 64, 67, 71, 84, 115, positivism 306, 308, 310, 311, 318, 319,
250-1,261 323, 324,326
centralized versus decentralized 250—1,
postmodernism
253
general relativism in 148,347,348
democratic 225, 234, 237, 238, 244,
neoliberal consensus and 41
247, 252, 254-69, 298
on History 347
family 120, 121
subjectivism and 305
indicative 35,92,250
poverty
participatory 251-5
as development and as
Plataia, battle of 190
underdevelopment 130
Poland 79,80,82, 131,281
Polanyi, Karl determinants of 121
Marx and 14 environment and 151
on marketization of land, labour and growth and 151
money 12, 14 in Britain 37, 131
on Nazi versus Western statism 24 in Russia 82
on pre-'market economy' markets 7 in the European Union 95
on the '100 years peace' 19 in the South 112, 129
on the Great Depression 20 in the USA 112,131
on the institutions for a self-regulating overpopulation and 119,121
market 44 Reaganomics and 164
on the market economy 10, 44, 104, power
332 concentration of 9, 21, 66, 67-73, 152,
the Great Transformation and 27 154
polis cultural 40
as a form of social self-instituting 342, democracy as equal sharing of 171, 175,
343, 344 180, 185, 186, 342,344
autonomia versus eleutlieria in the 179 dual 84,284,291
democratic education in the 209 economic 4, 23, 34, 38, 62, 68, 70, 71,
oikos and 212 116, 189, 196, 209, 210,239-40,
religion and the 343 337
sovereignty of the 185 financial 289,290
politics freedom and 183
a new kind of 276-89 inclusive democracy and 206-18, 231,
as technique 346 238-41,267

395
SUBJECT INDEX

political 52, 111, 163, 171, 172, 183, race/racism 4, 208, 231, 233, 267, 331
189, 195, 196, 207,336 rationalism
relations 4, 66, 177, 185, 207, 313 democratic 149, 306, 349-50
rights and 232-3 empiricism/positivism versus 308-11,
social 72,73, 191,204,340 316, 318, 322, 323, 325
state 15, 162, 163, 198,231 multi-dimensional crisis and 148, 149
system of balance-of 19, 45 'objectivist' 149, 326
structures in modern hierarchical rationing 117, 131, 249, 259, 260, 261
societies 116,230,279,284 Reaganomics 164, 350
taxing 290,299 realm
to determine production 291 ecological 206
working class 15, 26, 34, 37 economic 5, 196, 206
praxis 241,322,325,346-7 of freedom 159, 173, 197, 198, 199,
private property 269, 287
Aristotle on social conflict related to of necessity 197, 198
186 political 206,207,210
crime against 346 private 179, 194, 210, 212, 213
definition of freedom and 178 public 159, 171, 173, 176, 179, 195,
economic power and 239 206,210,211,212,284
private versus public realm 179, 194, 195, social 26, 206, 210, 211, 212, 213, 214,
210,212 215,286,288
regulation approach to development 116,
privatizations 25, 36, 80, 81, 82, 87, 89,
127-9
293
relativism
production
democratic 347-8
decentralization of 69, 243, 268
general 148, 306, 347, 348
diversification of 68, 70
Marxist 'philosophical tendency' and
massification versus de-massification of
321
68
philosophical 347
mode of 4-5, 123, 125, 126, 187
political 347
progress
'realist' Marxism and 326, 327
as an evolutionary process 329, 330,
religion 7, 121, 340, 348
331,333,338,347 democracy and 343-4
as development of productive forces 65, old hierarchical societies and 71, 148
71,73, 100, 183,243 representatives versus delegates 184, 207,
ethical 332 230
science and 148 republicanism 159, 160, 195, 200, 206,
profitability 230
decline in the 1970s 32-3 revolution
hierarchy and 245 American 231
increase in the 1980s 36 commercial 11
market concentration and 68 English 231
protectionism French 184,231
in the Asian Tigers 115 industrial 8, 12, 13, 15, 24, 62, 65, 73,
nationalism and 18 104, 118,280
new' 99-100 information 33, 36
rise of 17-19 Kuhnian 313
statism and 19-21 marginalist 123
types of 17 Russian 20
public utilities 18, 22, 89-90 socialist 23, 126, 197

396
SUBJECT INDEX

Rhineland model 97,141 'neutrality' of 155, 310


Right New Right and economic 33, 40, 123
economists of the 252 politics and 73,341,342,347
'libertarian' 183 problem of knowledge in Marxist theory
nationalist 47 of 321,323
New 33, 74, 157, 158 problem of method in orthodox
Old 33 philosophy of 312, 316
proposals to deal with the crisis 157-8 traditions in the philosophy of 306,
protectionist 99-100 307, 310
shift to the 37, 38, 145 scientific research programmes (SRP) 312
rights scientism 148, 306, 309, 340, 345, 347,
animal 276,277 348
civic 187, 188, 190, 191, 192,298 Second International 87
economic 173, 182, 232 Seikatsu 281
holistic view of 232 seisachtheia 189
human 173, 194,331 self-managed enterprises 246-7, 251
in an inclusive democracy 232 self-organization theory 329
liberal versus socialist conception of self-reliance
231-2 autonomy and 241
minorities' 233, 331 central planning and 243
political 94, 182, 187, 191, 192, 217, community 241-5
231 comparative advantage and 68
property 183 conditions for the increase in 289-92,
social 99, 182 295
women's 331 defined 241
Romania 131 ecological society and 242
Rome Treaty 91-2 economic 11, 95, 97, 102, 133-4, 289
rotation of work 262 economic democracy and 244
Roosevelt's New Deal 22 GATT and 242
Russia implications of the trend away from
'democratization' of 83 241-2
Latinamericanization of 45, 81—2 marketization and 102, 249
nationalism in 51 self-sufficiency versus 268
Stalinist 21 viable size for 244
shareholders versus stakeholders 204
safety nets 36, 47, 90, 91, 116, 292 Singapore 114
scarcity Single Market Act 45, 53, 92, 94
class dictatorships and 197 slavery 9, 179, 187, 192, 193, 194, 334
communistic fiction and 198 Slovakia 80
economic realm and 197-8 Social Charter 94
inclusive democracy and 225, 238, 252, social democracy
254 collapse of Swedish 87—8
post-scarcity 198, 224, 255, 269 competitiveness and 102,144
science decline of the EU 91-7
actually existing socialism and Marxist defined 74
174 demeaning of the content of 86-7
autonomy tradition and 349 neoliberalism and 86, 145
credibility crisis of 148-9 social democratic consensus
growth ideology and 65, 148 at the economic level 25, 86
liberatory project and 279, 319, 326 at the ideological level 27

397
SUBJECT INDEX

at the political level 25 planning 246, 253, 255


at the social level 26 project 103, 145, 251, 305, 324, 341
causes of collapse of 104 socialist statism
European Keynesianism and 92, 93 causes of the failure of 100-4
growth economy and 29 crisis of 73-4
internationalization and 29, 96 defined 15
neoliberal consensus and 39, 45, 91, East European 21, 75
141 economic democracy and 210, 239
neoliberal critique of 33-4 freedom and 182
not a conjunctural phenomenon 24 growth ideology and 66
Polanyi and 27 main historical forms of 74
post-war boom and 25 society
wage and price controls and 27 anarchist 69, 236
social ecology 150, 151, 276, 330, 339, autonomous 179, 180, 233, 334, 337,
340, 348 340,343
social legislation 15, 18, 20 capitalist 150
social liberalism class 85,323
from social democracy to 85-91 commercial 12, 13
in France 162 communist 197
social protection 97 community-based 233, 234, 235, 254,
social versus natural sciences 306, 309, 278
315,316, 328 confederal 214,215
social wage 26, 36, 86, 91, 94, 145 conserver 155
socialization 181, 215, 277, 285 consumer 66, 214, 337, 346
socialism 4, 68 decentred 200
eco-socialism 150, 151 democratic 198, 206, 207, 233, 254,
guild 204 283, 339, 340, 343
in one country 103 ecological 215,254,281,328,329
liberalism and 15, 63, 199, 228 economy and 116, 145, 183, 214, 217,
libertarian 74, 151 241,310, 358
market 202,203 free 198, 329, 330, 331, 332, 333, 337,
Marxist-Leninist 144 339, 340, 357
nation-state and 8, 202 growth 147, 148
planning and 71, 251 heteronomous 334, 337, 338, 339
power relations and 174 hierarchical 26, 66, 67, 71, 72, 116,
scientific 323, 341 148, 185,349
statist/state 181, 182, 183, 203, 295, industrial 25, 154, 155
334 libertarian 259
socialist market 4, 104, 202
conception of democracy 196 marketless 225,255,282
conception of freedom 178, 232 Marxist 180
conception of human rights 217, 232 moneyless 225, 281, 282
enterprises 293,295 multi-communal 182
ethics 100 nature and 213,214,215,330,345
growth economy 62-7,70,71,74, non-society 147
78-80, 100-2, 111, 115, 116, 174, non-statist 232
243 organic 13
ideology 66, 111, 159 post-industrial 68, 70, 144, 235, 253
market economy 6, 78, 79, 83-5, 251 primitive 13
movement 65, 73, 165, 333, 341 religious 180

398
SUBJECT INDEX

scarcity versus post-scarcity 206, 225, separation of economy from the 183,
238,254,269 194, 205
single-nation 86 separation of society from the 177, 182,
state and 341, 342 184, 195,341
stateless 226,239,281,282 social role of the 96, 164
tribal 180 supranational 51
'two-thirds' versus '40 per cent' 38, 39, statism
47, 48,83, 86, 95,110,132,142, as a transitional phenomenon 44
276,358 Bretton Woods system and 27
Solidarity, Polish 158, 159, 281 civil society and 38, 161
sovereignty collapse of 28-33
Athenian versus European conception of cost of production and 31
184 defined 3
collective 54 dialectic of 251
during World War II 24
market 173
flexible currencies and 27, 28
of Parliament 184
'forty per cent society' and 38
of polis 185
Gold Standard and 20, 27
of the nation-state 3, 4, 28, 42, 48, 173
international 53
supranational 173
internationalization and 28-33, 46
Soviet Union see USSR
Keynesian 124
Spain 38, 43, 144, 281, 293, 297
Nazi versus Western 23-4
Spanish collectives 208, 333, 335
Polanyi and 24, 44
spiritualism 199, 235, 236, 344, 348, 349
pre-war 22-4
Sri Lanka 131
protectionism and 19-21
'stagflation' crisis 33, 93
social democratic 33, 34
stakeholder capitalism 99, 217, 225 Stalinist Russia and 21
Stalinism 21, 83, 178, 250, 341 unemployment and 25-6, 34
state steady-state versus growth economy 111,
as a class instrument 163 136,152, 153
as necessary evil 338 Stoics 345
bourgeois versus proletarian 74, 197 structuralist approaches to development
civil society and 160, 161, 162, 124-5
199-200, 239 subjectivism 305
confederations versus the 11, 19, 52, surplus
299 agricultural 21
democracy and the 197 economic 9, 118, 124, 126, 127, 163,
'democratization' of 199, 201,283 187, 188, 192
economic role of the 20-3, 25-7, 29, labour 84
32, 39, 48, 50,51, 141, 172 trade 80
emergence of 9 sustainable development approach 150—2
globalization thesis and the 46 Sweden 22,38,86,87,88
human rights and 232 Swiss cantons 208, 334, 347
in the Middle Ages 9-10 Switzerland 30
intervention(-ism) 22, 23, 27, 86, 93, Syria 131
118,202
market and 8-10, 11,25 Taiwan 114,243
minimal 157 Taoism 344,345,348
monopoly of violence of the 47, 51 tax(-es)
nationalism and the 11,19 as cost of production 31-2

399
SUBJECT INDEX

cuts for the rich 36 uncertainty principle 305


demotic system of 290 underclass 37, 38, 89, 144, 146, 151, 276,
disparate effect of 38 277, 286,358
evasion 35, 90 unemployment
power in a transitional strategy 290 as an incentive 77
progressiveness of income 86,189 general equilibrium and 249
technical progress 118, 123, 259 Gold Standard and 20
technology in China 84-5
confederalism and 234 in Germany 98
direct democracy and 230 in Japan 115
ecological crisis and 154—5, 331 in Sweden 88
efficiency and 68 in the G7 35
homogenization of 331 in the neoliberal phase 35
in actually existing socialism 101 in the statist phase 24—5
in an inclusive democracy 265—7 in the USA 35, 98, 141, 147
neutrality' of 101, 155, 331 in theory 75
teleology 326, 328 low-paid employment versus open 142
Thailand 114,243 open versus disguised 75, 78
Thatcherism 37, 164, 350 prospects for 95, 141
Third World 29, 74, 113, 119, 125, 132, 'stagflation' and 33
135, 155,215 structural 35
torture 331, 332 UNICEF 131
totality 127,252,316,317,318 unions
trade civil society and 158, 160, 162
Bretton Woods and 27-8 in a transitional strategy 283
expansion of international 17, 18, 28 in Britain 37, 163
flexible currencies and 27 in Sweden 88, 162
foreign 10, 42 in the USA 37
free 15, 16, 17, 18, 19, 31, 43, 242, 243 legislation against 15,23
'greening' of 100 neoliberal consensus and 40
in classical Athens 189, 192 social democratic consensus and 26, 34
in Middle Ages 8 United Nations 45, 46, 51, 158, 205
internationalization and 28-30 UN Human Development Report 142
intra-regional versus inter-regional 99 universality of welfare state 47, 90, 91
local 8, 10 USA
national (internal) 10, 11, 16 as a reserve currency country 50
openness 32, 50 film industry of the 40
speculative capital movements versus income inequality in the 37, 141, 158
movements related to 42 NAFTA and 42, 144
statism's controls on 21 positivism in the 308
TNCs' control of 135 prison population in the 147
welfare state and 87 trade openness in the 41, 50
within the Comecon region 81-2 unemployment in the 35, 98, 141
within the G7 countries 69 US Labor Department 141
transitional strategy 275, 281, 282-5, 289, USSR/Soviet Union 76,77,79,81,337
291,292,299 Utopia 345, 346
Triad 47, 48, 49, 69, 72, 89, 92, 95, utopianism 156, 340, 345
141-2, 144, 157
trickle-down effect 48, 113, 122, 151, 250 values
truth theories 308 community 55, 158, 225, 227, 242

400
SUBJECT INDEX

cultural 68, 73, 154, 156-7 dependence on 33


democratic 233, 345 European Union and 52, 93, 95
dominant social 63,156 expansion of 26, 31
ecological 153,237,332 financing of 35, 86
human 153, 177 'forty per cent society' and 86
individualistic 145 neoliberal consensus and 24, 36, 38, 87
market 55, 146, 242 neoliberal theorists on 33-4
'rationing' 259 'safety net' versus 47, 292
'universal' 78
state commitment to 38,196
Vienna Circle 310,317
social democratic consensus and 25, 86
Vietnam 6,63,79,83,111,131
social liberalism and 87
violence
trade and 87
physical 120,285
universality of the 90
economic 9, 120, 285, 299
Westphalian system of nation-states 51
state's monopoly of 47, 51
vouchers worker-oriented models 253, 255
basic 257-8 World Bank 30, 45, 79, 82, 84, 100,
non-basic 258-61 112-14, 121, 125, 129, 130,131,
172,225,244
wage differentials 43, 127, 293 World Conference on Population (1994)
Waldenll 261-2 120
welfare state worldview 197, 313, 314, 315, 316, 317,
Asian Tigers and 115 321,326,340,348
Beveridge Report and 24 World War I 19,21
communitarianism and 225-7 World War II 21,74, 111
crisis of social democratic politics and
145
demotic welfare system versus 292 Yugoslavia 79, 146

401

You might also like